As I read the considerable amount of press Uber is attracting, the level of negativity from the insurance industry is striking. Uber is free-loading. Uber is undermining consumer protections. Uber encourages drivers to engage in what amounts to insurance fraud. And on and on. Reality is, Uber, Lyft and the many other start-up companies of their ilk are meeting a new set of needs reflected by the burgeoning sharing economy -- needs that traditional businesses with traditional business models and traditional approaches to connecting with customers are not satisfying. Functionally, these new entrants supply high-quality goods -- whether it’s an immediately available taxi ride in midtown Manhattan or a cozy apartment via Airbnb in Milan. Emotionally, they deliver good value for the money, competent service and a pleasant experience. These offerings also meet higher-order emotional needs that people have, e.g., for control, security, freedom, even independence. This ability to connect not only functionally but also emotionally suggests that the sharing economy sector is here to stay. These companies are firing on all of the cylinders that make for enduring offerings. That said, the entrepreneurs behind these offerings are riding on the back of the long-established risk-management practices -- policies, pricing, product -- of the insurance industry while avoiding the burden of full, dedicated insurance coverage. The reaction of the insurance industry has been to cry foul, call out the regulators and point to the consumer protections provided by traditional insurance. Is this reaction ultimately productive? Technology is pulling the rug out from under business models that looked quite durable even a decade ago. Customer habits and desires for discovering, investigating, shopping for, purchasing and servicing insurance bear less and less resemblance to those upon which the industry relied for the first two centuries of its existence. As an alternative, I propose the insurance industry look at Uber, Lyft and their peers as a force for positive change and as inspiration to evolve the insurance sector toward continuing strength and relevance in the new economy. This approach can be a path to growth, profits and stability. One way to achieve this vision is for leaders in the industry to foster cocreation platforms. Cocreation, simply put, is bringing together constituents from inside and outside your company to innovate and problem-solve around big opportunities and issues. Cocreation is a way to engage the instigators of the sharing economy in helping the industry figure out how to transform its risk-management practices to work in new sectors of the economy. What does cocreation look like? Imagine diverting the industry’s focus from what’s wrong with sharing economy companies, to seeing their emergence as the opportunity to create forms of insurance supporting new business models. Next, imagine identifying all the constituents who might contribute creatively and with impact to figuring out how to realize the opportunity in a way that is sustainable. These might include experts on current insurance practices, but importantly would include heavy representation of “outsiders”; i.e., people who work for sharing-economy companies, users of their services, regulators, distributors and big data, digital, brand and customer experience experts.  Constituents would include people with no connection to the insurance industry who bring totally different perspectives that can be applied to insurance -- for example, airlines (shared transportation), retail (mass market franchises and distribution), “experience” companies (innovators that elevate an offering beyond product features and price). What’s important is to include people for whom there is something to be gained by participating. Now imagine giving these constituents a private forum -- possibly a 24 x 7 Facebook-type site -- where they can engage in dialog on topics relevant to the challenge, or on opportunities to come together for a facilitated meeting in a physical space where they might prototype solutions to the challenge. Finally, imagine that you as the insurance carrier can listen effectively and glean insights about possible new offerings and use these findings to define alternative approaches that can be validated through an iterative process of test and learn. Cocreation is another way to think about solving the “problem” of the Ubers of the world, harnessing the immense creativity that spawned the sharing economy to be a force for enabling new sources of value from which we can all benefit.

With the traction that InsuranceThoughtLeadership.com (ITL) is now seeing in the marketplace, a consensus developed among the principals that it was time for the addition of a new channel of expertise to further flesh out the rapidly evolving practice of risk management and help influence its course and impact on the success of organizations. This description of risk management’s potential is resonating more and more with both practitioners and senior leaders, including board members. Yet risk management is morphing under several different rubrics, including enterprise risk management (ERM), strategic risk management (SRM), governance, risk and compliance (GRC) and older terms like holistic or integrated risk management that do not seem to have gained much traction. Confusion is increasing among practitioners and leaders as the semantics shift. For various reasons, some good and some not so good, the emphasis on risk management is shifting, as well. One could easily argue that names and acronyms shouldn’t matter, but they do, if only to gain recognition and acceptance for the discipline among a remaining, and not insignificant, group of observers. There are meaningful differences between ERM, SRM and GRC that relate to the focal point of each practice. In addition, there are practitioners who use these terms/acronyms in different ways. I might, as I often do, like to say that it’s all just “risk management” or at least should have been had we not pursued these tangential efforts that have not served a portion of the user community well. You might note the irony in this statement because my reputed expertise is in ERM, for which I have had direct connections as a practitioner and consultant, as an author and as simply an advocate for a more robust approach to managing risk for over 13 years. Nevertheless, for the more astute, these nuances in risk management have often been beneficial. They have allowed advanced practitioners to evolve their profession further by narrowing their focus to the more material and significant aspects of the discipline, as they relate to their specific environment, culture and situation. Confused yet? Well, don’t be. But realize that a key pillar of great risk management is doing it in a way that is most germane to your organization and its needs and priorities. Customization is the order of the day for managing risk well. That means that, while some organizations may want to deploy a comprehensive approach, others will want to pick and choose those components that are meaningful and will have the most impact. Customization also means that certain risk stakeholders will have greater stakes in the outcomes than others. Each organization’s risk stakeholder group will be unique in its make-up, and this drives other aspects of customization that enable alignment among all players. But the key question now for this launch of a new topic channel for ITL is how it fits into the ITL “conversation” strategy, which is focused on driving change in the broader insurance industry space. We have decided to take the “risk management” channel that has existed since the beginning and rename it as ERM. Risk management, since the inception of its use as a term of art, has overwhelmingly meant the management of hazardous or insurable risks; strictly construed -- a subset of operational risk. Traditional risk management is no doubt an important discipline in its own right, but companies need to broaden their thinking and include risks that are not insurable (e.g. financial and strategic). I love to say, “Enterprise risk management is what risk management should have always been.” So while we will always need what I consider “traditional” risk management to address insurable risks, an enterprise-wide approach to managing risks must ultimately be employed, regardless of the label or name given to the activity. This will improve the chances of survival in an increasingly challenging world and ultimately success – even if it comes at the expense of those who ignore this truth. Regardless of the choices people make, what really matters is managing risk with excellence and ensuring that, no matter who is involved, all significant risks are addressed. Why? Because effective risk management is directly tied to organizational success. I like to say, “A risk is not a risk unless it either threatens or facilitates an objective.” If this foundational principle is true (and why would I lie?), then the effective management of all significant risks must become a mandate for leadership and a top priority for the board. We can say this has always been a truism for organizations, but evidence suggests otherwise. The landscape is littered with extinct companies that failed in this regard. And while it is true that effective risk management is simply a part of good management, so are many other components that fail regularly. So the question then becomes, how will businesses achieve this fundamental (though lofty for some) goal to increase the chances of both short- and long-term success? Answering that question is what this ITL channel will make its mission. We will do so by providing you content from some of the best ERM thought leaders and successful practitioners who have achieved or are well on their way to achieving this goal. To that end, I am happy to introduce today, the first group of contributors who will work with me to bring you the best new ideas in ERM, including tools, advice for avoiding pitfalls, techniques, strategies, tactics and success stories. This group will include:

• Russell McGuire, director of ERM/GRC practice, Riskonnect (U.S.)
• Grace Crickett, senior vice president and chief risk officer, AAA of Northern California, Nevada and Utah (U.S.)
• Marc Dominus, ERM practice leader, Crowe Horwath (U.S.)
• Dave Ingram, executive vice president, Willis Re (formerly S&P’s ERM leader) (U.S.)
• Donna Galer,  chief administrative officer, Zurich (retired) (U.S.)
• Rick Machold, chief audit executive, Total Systems Services (U.S.)
• Mark Stephens, managing director, Milliman Risk Advisory Services  (U.S.)
• Peador Duffy, chairman, Risk Management International (UK)
• Horst Simon, director, risk management, Horwath MAK, (Dubai)
• Gary Bierc, CEO and founder of rPM3 Solutions (U.S.)
• Norman Marks, vice president and chief audit executive, SAP,(retired) (U.S.)

While you may not know all of these names, I assure you they are big thinkers, have accomplished much and will stimulate new thinking for this discipline and help you, our readers, reach new heights of ERM success. So, stay tuned and come back frequently. What you’ll see here will always be fresh and insightful.  

Contributor Biographies

Marc Dominus Marc is the enterprise risk management (ERM) solution leader for Crowe. His responsibilities include coordinating the design and delivery of Crowe's ERM services and directing innovation initiatives in this area. His experience includes more than 20 years of providing risk management consulting services. Marc's areas of expertise include ERM framework specification and  implementation, enterprise risk assessment (ERA), professional training, executive strategic workshop facilitation, risk culture enablement and change management. He has performed consulting engagements and delivered training programs for significant and complex private and government organizations for major corporate and public entities across the world. He frequently writes, presents and delivers professional training on topics related to ERM. Donna Galer Donna is a consultant, author and lecturer. Her top-selling book, Enterprise Risk Management – Straight to the Point, with co-author Al Decker, was published in 2013. She served as the chairwoman of the Spencer Educational Foundation from 2006-2010, following retirement from Zurich Insurance. This foundation awards scholarships to students studying risk management and insurance. She held a number of positions in her 17 years at Zurich from 1989 to 2006. Her last position at the company was chief administrative officer for Zurich’s world-wide general insurance business ($36 billion gross written premium, or GWP), with responsibility for strategic planning among other areas. She began her insurance career at Crum & Forster Insurance after a brief time at JPMorgan Chase (Chase Manhattan). She has served on numerous industry and academic boards, published many articles on ERM and strategy and was named among the Top 100 Insurance Women by Business Insurance in 2000. Horst Simon Horst is the director of risk management at Horwath MAK (a member firm of Crowe Horwath International) in the Dubai International Financial Centre. He has held positions with Mashreq Bank, Emirates NBD, Barclays Bank and Standard Bank Group of South-Africa. He has lived in four countries and worked in more than 20. He worked as an associate with a number of renowned global firms in banking, professional services, training and business process outsourcing and has been in the banking and consulting industries for more than 34 years.  Supported by the UK-based consultancy Genius Methods, he developed and launched the risk culture maturity monitor, an online tool that accurately measures the level of maturity of an organization’s risk culture. His special interest is in the field of people risk, and he is a regular speaker at international conferences, a trainer in operational risk and enterprise risk culture in the Middle East, Asia and Africa and a blogger on www.Zawya.com. He supported the capacity building program of the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI); he is the co-regional director of the Global Association of Risk Professionals (GARP), Dubai, UAE chapter, and a member of the Professional Risk Managers‘ International Association (PRMIA). Grace Crickett Grace’s career has been diverse, involving a variety of industries, ranging from equipment rental to healthcare and from not-for-profit to a Fortune 500, covering the U.S., Canada, Mexico and Singapore. The scope of her work has included self-administration of claims, safety and loss prevention, internal audit, benefits administration, continuity planning, emergency management, captive management and IT and physical security. As senior vice president of risk services and chief risk and compliance officer with AAA NCNU, she is charged with implementing ERM with her compliance, risk management and internal audit team. Grace was chosen in 2011 as one of Business Insurance's Women to Watch. Grace was also selected by Business Insurance magazine for its 2011 Risk Management Honor Roll. Also in 2011, Treasury and Risk magazine named Grace as one of the “100 Most Influential People in Finance.” She received the Information Security Executive (ISE) of the Decade Award in 2012 and West and North America Awards in 2011.  She is actively engaged with various professional organizations, including RIMS, as a member of the ERM committee and president of the Golden Gate Chapter. Peador Duffy As founder and chairman of Risk Management International (RMI), a successful and growing risk management practice for the past 20 years, Peador has been at the leading edge of risk professionalism and assisting companies to manage strategic risks to their business model. A former officer with the Irish Defence Forces, he has taken first-hand military experience to the boardroom in helping businesses develop superior risk analysis and in conducting crisis scenarios with senior management teams in major corporations and businesses of critical national interest. He provides thought leadership and a pragmatic approach as a strategic overlay to risk traditionalists and has seen risk management grow from board room buy-in, as a compliance imperative, to board room traction as a competitive countermeasure after the global financial crisis. Dave Ingram Dave is a member of Willis Re’s analytics team based in New York, offering insurers a practical way to use ERM to identify specific actions and strategies that will enhance the risk-adjusted value of the firm. He assists clients with developing their first ORSA, presenting their ERM programs to rating agencies, developing and enhancing ERM programs and developing and using economic capital models. In 2012, Dave was named one of the 100 most influential people in finance by Treasury and Risk Magazine. With more than 30 years of actuarial and general management experience in the insurance industry, Dave has served as corporate actuary, business unit head and planning officer for a major U.S. insurance company. He was previously the senior director, ERM, in the insurance ratings group of Standard & Poor's (S&P). In that position, he spearheaded the initiative to incorporate ERM as one of the primary insurance ratings criteria and the development of the framework for reviewing economic capital models. He also was a consulting actuary providing advice on risk management and risk analysis to banks, investors and insurers with Milliman. In addition to writing some 100 published articles relating to ERM, Dave has spoken on ERM at more than 100 events in North America, Asia, Europe, Middle East, Africa, Australia and South America. He was the first chair of the 2,500-member Joint SOA/CAS/CIA Risk Management Section. Dave is now the chair of the International Actuarial Association’s enterprise and financial risks committee and chair of the Actuarial Standards Board ERM committee. Dave is a graduate of Lehigh University and has an enterprise risk analyst charter from the SOA, financial risk manager certification from GARP and professional risk manager certification from the PRMIA. Rick Machold Rick has more than 28 years experience across multiple industries and disciplines, including business risk management, process design and improvement, change facilitation, forensic accounting and strategic planning. He was most recently head of enterprise risk at Invesco and had global responsibility for the company’s enterprise risk management efforts. As administrative coordinator and member of Invesco’s corporate risk management committee, he oversaw the continuing development of the company’s ERM framework, tools and practices. His background is primarily in management consulting and public accounting, having served as a partner in PricewaterhouseCoopers global risk management solutions practice in both St. Louis and Atlanta. His clients have included the Centers for Disease Control and Prevention (CDC), the New York Yankees Partnership, Wyeth-Ayerst, Ryder System,  Dell and many others. For several years before joining Invesco in January 2007, Rick was an independent consultant in enterprise risk management to First Data, based in Denver. He subsequently served as senior vice president and chief risk officer for Certegy, a transaction processing provider based in Atlanta. Rick serves on the board of City of Refuge in downtown Atlanta and is an active member of the Institute of Internal Auditors and the Risk Management Research Council. He is a frequent speaker on enterprise risk management and has written several articles on enterprise risk management and internal control. Rick is a regular guest lecturer on ERM for the University of Georgia’s EMBA program and most recently for Kennesaw State University. Mark Stephens Mark manages the Milliman Risk Advisory Services practice group. The practice delivers a portfolio of risk consulting services, such as enterprise risk design, test and build projects, operational risk assessments, ERM education and training and ERM technology evaluation. The ERM practice uses diagnostic consulting strategies to understand an organization’s enterprise risk goals and challenges and then customizes solutions to deliver required business results. In addition, Mark is the executive director of the Milliman Risk Institute, which supports enterprise risk management research and development. The Milliman Risk Institute advisory board meets on a semi-annual basis and conducts corporate surveys and publishes the results along with expert commentary. Mark began his career as a risk management consultant for Federated Mutual and later became managing director for Aon Risk Services. While at Aon, Mark designed and managed Aon Value Exchange, which provided pricing and margin guidance for broker products and services. In addition, Mark managed the Aon Global eSolutions Group, which developed risk analytics software for multinational clients to assist with enterprise risk, claims management, exposure management and policy management. Mark served on the management teams for Aon’s enterprise risk practice council, the financial institutions practice group and the ARS-US national service board. Mark also led national and international change-management teams for risk software integration and for margin improvement. Finally, Mark was CEO of Aon RiskLabs and led the M&A team for Aon’s acquisition of Risk Laboratories and Valley Oak Systems. In 2007, Mark founded Strategic Risk Partners, where he designed industry-leading best practices for enterprise risk management and operational risk management. In addition, he developed unique online software platforms for collaboration around governance, risk and compliance, ERM and operational risk Russell McGuire At Riskonnect, Russell is director of ERM Services and in charge of development and implementation of solutions for ERM, including design of GRC software. He consults with clients on the establishment of an effective, sustainable ERM framework supported by the necessary technology to ensure success. Gary Bierc Gary founded and is CEO of rPM3 Solutions, a software and services firm specializing in the practical application of "cost of risk" in an ERM context. rPM3's ARQ Technology software creates powerful outputs and analysis around the cost of risk, which exposes important links between risk and performance. This unique software delivers a patented method to make the process of identification and quantification easy and repeatable for any business or enterprise. Norman Marks Norman has spent more than a decade as a chief audit executive for major companies, with as much as $28 billion in revenue. He has implemented isk management, ethics programs and disclosure processes at multiple organizations and is a recognized thought leader in the professions of internal auditing and risk management. A frequent speaker and writer on governance, risk and controls, he is the author of the popular book from the Institute of Internal Auditors' on Sarbanes-Oxley Section 404 and of the IIA's GAIT family of guidance products. Norman has built or repaired internal audit functions to standards that are recognized as world class by management, audit committee members, service providers, CPA firms, peer CAEs and other internal audit leaders.

The first part of this series declared that HR managers now control the basic tenor of how safety management is executed in most organizations. As veteran safety professional Mark Kennedy says, “There is now no difference between safety and human resource management. I consider them one.” As a result, safety has adopted a kinder, gentler disposition as it emphasizes employee relationships and teamwork. A worker’s safety performance is now judged in large part by a new compulsory social norm -- civility. Safety has become a social change movement that should worry insurers. Experts say safety has suffered as a result of its increased focus on relational sensitivity. Workers with naturally grumpier temperaments -- a majority of workers performing safety-sensitive jobs -- feel unfairly targeted for change, or worse. Is this concern justified, or are these workers simply part of a long-time dispositional safety problem that is only now being rectified through HR-led safety departments? Following a dangerous path A look at how this change is being felt by one company’s workers provides insight. For the past three years, one large company has invested heavily in an employee safety awareness campaign designed by an HR consultant. The campaign includes training classes in which employees are equipped with relational skills to improve the company’s safety climate. Topics are standard training fare -- teamwork, leadership, communication, supervising -- aided by insight gained from a behavior assessment tool. Initial results indicated that the company reaped an improvement in both safety attitude and incident rates. Thereafter, rates plateaued. Employees now quietly question the campaign’s viability. Upon review of the campaign by independent sources, it was noted that training instructors were telling participants that they must avoid using what could be perceived as critical or confrontational behavior toward others, even if used to keep them from imminent injury. A typical reaction came from one worker, who looked on incredulously when he was told that he could not raise his voice to stop a coworker from potentially injuring himself. Yelling to prevent injury would be as harmful as allowing the coworker to risk injury. Civility must prevail. In another training class, students expressed shock at the audacity of someone who bluntly told a coworker to “get your hand back inside the elevator door” as it closed. (The coworker was holding the door open for a late-arriving colleague, a violation of safety policy.) Shame, shame, the class repeated in Gomer Pyle-like unison. Shame on the worker for acting rudely. If these instances were isolated cases, there would be no cause for concern. But other companies mirror a similar trend. Reaching beyond good intentions Such a foray into forced sensitivity was never intended. Two decades ago, pressure from safety regulators and large insurance brokers caused many companies to improve the safety-critical "people skills" of their labor force. Of greatest concern were interpersonal communication skills most often cited as being involved in incidents. The consensus among company managers was that specialized employee development personnel with HR-like perspective were needed to better facilitate the training effort. Existing safety instructors wouldn’t do. Some companies turned over the keys entirely to their HR departments. Symbolic of this was a 1994 meeting in the boardroom of a large maritime company whose vessel personnel lacked the necessary interpersonal skills to safely manage crewmen and conduct operations. Determining a path to improvement was the sole item on the agenda. The meeting was held under the watchful eye of the company’s risk management consultant. Present were the company’s executive vice president, its HR manager, a client-representative, a regulatory authority and a training contractor. No company safety representative was invited. The company approved an extensive safety-training program for vessel officers that day. Its focus was simple: Improve communication skills. More than 1,200 of the company’s vessel officers eventually participated. Other companies used the same blueprint to train 2,300 of their officers. Maritime executive Larry Rigdon says that the training contributed significantly to “a positive change in employee attitude toward themselves, the company and the industry.” With the widespread success of training initiatives like this, safety discovered its softer side, and HR was given a change agent that it could use for broader purposes than risk control. Large insurance brokers quickly fell into formation, strongly suggesting -- sometimes demanding -- that their customers recast their safety programs in the civility-first mold. But brokers did not envision the long-term effects of their endorsement. Looking back, the risk manager present at the maritime company’s 1994 meeting (who wishes to be anonymous) states that early training efforts were focused on developing leaders who would “manage the loss-reduction process.” Relational skill-development was undertaken for a specific purpose, so that employees could better convey “where they are going and whether or not they have reached their objectives . . .to reinforce tactics and targets.” The soft side of safety was created to enable workers to achieve concrete objectives, not to teach haters to be likers, or convert negative-mood individuals into positive ones or to intimidate those who do not fit a preferred mold. Correcting course Only insurers have the muscle to reverse the tide of the paralyzing civility movement within safety. Like two decades ago, they must exert influence with customers who need direction. Here are a few things that insurers can do to right the balance of the listing safety ship: -- Sit down with the customer and ask the following three questions: Standard-setting Which department establishes the behavioral standards of how employees should personally relate to each other in fulfillment of the company’s safety mission? Training Which department is responsible for training employees in those standards? Enforcement Which department holds workers accountable, and how? Search for duality or overlap (between HR and HSE) that may be confusing to those responsible with accomplishing the safety mission -- that’s everyone. -- Poll the customer’s safety representatives confidentially. Ask their opinion about the direction of the company’s safety management program. Give credence to the opinions of long-time safety professionals who have witnessed the evolution discussed here. -- Review the vision, mission and goals of the customer’s safety program independently and determine how they are accomplished within the customer’s real work climate. Search for tangible evidence that the core elements of loss prevention are being achieved as a first priority. Insurers should present their findings, along with recommendations, to the customer. The long-standing safety goal of zero incidents turned into zero tolerance years ago. Under HR’s influence upon safety, the policy frighteningly approaches intolerance. Now is the time to reverse the trend. Then again, as a reformed hater, perhaps I am just being too sensitive.

What is a quantitative business case for an IT investment? It is a quantifiable measure of benefit, in dollars, that can be realized by making a quantified investment of resources. While resources can be capital, human, intellectual property, etc., in the end it can all be reduced to money. What money is one putting in and what return is one getting out as a result? Making the quantitative case is a long- practiced ritual in many insurance organizations. I may be committing heresy by asserting that the quantitative case is much overrated, doesn’t serve the purpose it was intended for very well and may, in fact, be an exercise in futility. I’m not making a general statement: I’m speaking about various IT modernization or transformation initiatives in the insurance industry, which I work in and serve. I took enough corporate accounting and finance courses to qualify as a finance major and as a result am familiar with the mechanics of discounted cash flow analysis, valuation of initiatives, calculations of NPV, IRR, payback, etc., etc. While the theory of the quantitative approach has always seemed compelling, 20 years of practice has taught me the reality and informed my views very differently. Why, then, is the quantitative case typically so favored? There are two primary reasons. First, quantifying helps with understanding the return on investment for any individual undertaking. Second, and perhaps more important, when many initiatives vie for scarce capital, quantitative cases can allow for comparisons. And in most organizations, one of the most important responsibilities of an executive team is to allocate capital to the most beneficial initiatives. All this sounds quite straightforward. What, then, is the problem with the quantitative case, especially for initiatives that require big capital expenditures? The problem is not with the mechanics of quantifying. Once the investment and income streams over a reasonably desired time horizon are identified, weighted average cost of capital (WACC), discounted cash flow (DCF), net present value (NPV) and internal rate of return (IRR) sorts of metrics are quite mechanical to calculate. The real problem with so-called insurance modernization or transformation initiatives is with establishing the variables of investment stream, income stream and time. There are two ways to try to establish these three variables. First, if one can precisely establish the required investments and expected returns over a period. If I know that I have to travel 300 miles and know that I will drive 75 mph, I can mathematically say that I will complete my travel in four hours. Second, if a vast body of empirical evidence exists, then one can at least probabilistically try to establish the three variables with associated confidence levels. But I would argue that with initiatives in the insurance industry that require large capital-expenditures, neither approach works. With insurance industry initiatives, quantifying income returns, investments and time period with precision is extremely difficult, if not impossible. On the investments front, projecting increase in premiums and profits, cost savings through headcount reductions and other items and cost avoidance are all an exercise in sheer guesswork. Estimating the costs and timelines of large technology projects also remains elusive. No matter how diligently and hard people work to identify these, the estimates end up being wrong--often, not by some tolerable deviation but rather by orders of magnitude in overruns in costs and time. Because the vast body of insurance initiatives suffers the same fate, there isn’t reliable empirical evidence to probabilistically establish income, investments and time period with any degree of confidence. And there are other variables that further undermine the attempts at calculations – differential in resources and execution approaches from one initiative to the other, culture of organizations, market changes, technology changes, and much more. Despite the problems associated with the quantitative business case, most organizations still pursue it. Internal teams work on project portfolios and appropriation of funding exercises. Vendors are always at hand to help the teams develop the business case to sell it to the C-Suite and the board. Within the organization, committees and councils are established to review the “case,” “wisely adjudicate” and pick “winners” and “losers” among candidate initiatives. All these various constituents are well-intentioned and are following the rules of the game. The problem is with the current “rules of the game” and not with those who play. Are there alternative approaches, then, both to decide whether to fund a given initiative and, once funded, to determine how best to use the funding to ensure that an initiative is yielding benefits? In several instances, I have been fortunate to witness bold leaders abandon the traditional method and take a more pragmatic approach. I’ll discuss this in Part II.

Insurance companies have struggled to meet evolving customer needs and expectations. As a result, they are facing serious obstacles to growth. In the P&C sector, gaining market share is a zero sum game, particularly in the saturated auto insurance marketplace. The life insurance market is shrinking as fewer consumers purchase policies. Over the last decade, in particular, insurers have struggled to meet customer expectations for greater price transparency, top-notch customer service, real-time response to service requests 24/7 access and more. Many retailers and companies in other industries have been able to provide customers the experience they want, so why are carriers struggling to do this? There are three primary reasons:

1. Insurers know little about their end customers because they’ve historically viewed intermediaries as their customers.
2. A growing number of customers want a self-service option, but product and process complexity (unfamiliar language and many product options) makes it difficult for insurers to provide one.
3. Insurance carriers’ fragmented operating models lead to inconsistent customer experiences. And the operating models make it difficult for carriers to gain the complete view of customers that’s needed to design tailored solutions.

Rather than making products and agents their business focus, it’s time for insurers to put customers at the center of their business models. Customer-centricity has three dimensions:

1. Customer insights: Carriers should mine the wealth of available data about their customers to gain insights into their needs and behaviors so they can deliver the experiences and products that customers want.
2. Customer experience: All interactions with the customer should be consistent and streamlined, and they should match each customer’s needs and preferences.
3. Customer-centric operating model: The organization’s structures, systems and processes should operate with one goal in mind: delivering quality customer experiences efficiently and at a reasonable cost.

By adopting a customer-centric approach, insurance companies can win new business, increase sales to existing customers and build brand loyalty. Customer centricity also yields other benefits, including increased operational efficiency and reduced costs and more predictable, data-driven business results. For the full paper on which this article is based, click here.

When selecting counsel to defend them against a securities class action, companies usually face the question of whether they want to hire attorneys from their regular outside corporate firm. Sometimes, companies will retain their regular outside firm as a matter of course, without even going through an audition process to interview other potential defense firms. While such an arrangement is frequent, it can be inappropriate.  Ethical and practical conflicts lurk beneath the surface that can make it unwise for a company to hire its regular outside firm for securities class action defense -- and these conflicts need to be examined more closely by companies, their insurance carriers and the counsel seeking to represent them. It is a dilemma that all securities counsel faces at one time or another -- when should they turn down representation of a firm client in a securities lawsuit? Over the years, I have struggled with that question, and my analysis has evolved and grown sharper.  The north star of the analysis is a basic principle: Attorneys should not represent a client when they have a conflict that could compromise the client’s defense. In the context of securities litigation defense, a conflict can arise when it is in the client’s interest to rely on the defense firm’s corporate work as a defense against allegations of falsity or scienter (intent or knowledge of wrongdoing), or to establish a due-diligence defense. For the client, it is a question that boils down to whether the same firm that provided disclosure or stock-trading advice can make an objective decision about whether to disclose that advice to assert these defenses. The company, not its lawyers, makes disclosures. But lawyers play a prominent role in many disclosures, by drafting or editing them, by giving advice to the company about their adequacy and by weighing in on decisions not to disclose certain information. This is more true of some disclosures than others -- public offering materials, for example, are likely to be largely drafted by the attorneys, who will weigh in on every important disclosure decision. Lawyers also advise on matters that bear on scienter -- primarily the presence or absence of material nonpublic information in connection with establishment of 10b5-1 plans and periodic stock sales, and on stock offerings. Even if lawyers have not technically provided legal advice or representation on these matters, directors and officers often rely on their regular counsel to object to potential misrepresentations or ill-advised stock sales about which they had notice. I am not suggesting that it is never appropriate for a company to hire its regular outside firm to defend a securities class action -- in some cases, the firm may not have had any involvement in the disclosures or decisions that are being challenged, or that are likely to be challenged as the case proceeds. For example, if the stock price drop that triggered the litigation was caused by a restatement, the litigation likely will not implicate the lawyers’ disclosure advice, because the case will be about the company’s financial statements, on which the lawyers didn’t work.The above considerations yield two guiding principles:

• If the securities class action challenges a disclosure on which a firm has provided disclosure advice, as to what was disclosed or what was not disclosed, the firm generally should not defend the litigation.
• If the securities class action relies on stock sales as evidence of scienter, a firm that advised on the stock sales – or 10b5-1 plans under which the stock sales were made – generally should not defend the litigation.

In addressing this issue, some law firms tend to emphasize only the lawyer-as-witness problem, which in many states can be avoided by having another firm examine the defense firm’s lawyers. But the problem can be more significant than this. Let’s analyze the situation with a simple hypothetical. A securities class action against Acme Corporation challenges a statement in Acme’s 10-K. Acme’s regular outside corporate counsel provided advice to the company about the challenged disclosure, including advice that certain omitted information that allegedly made it misleading did not need to be disclosed. As evidence of scienter, the lawsuit cites Acme’s officers’ sales of company stock pursuant to 10b5-1 plans established during the alleged class period. Corporate counsel advised that the officers had no material nonpublic information when they established the plans. Acme and the individual defendants will have an interest in defending themselves by asserting that they relied on the law firm’s advice, both as to the disclosure decision and the stock sales. At first blush, it may seem that the positions of Acme and its law firm are the same -- both want to defend the correctness of the disclosures and stock-sale decisions. But their interests are not the same. Even if their lawyers’ advice was wrong, the defendants may be able to avoid liability, as long as their reliance upon it was reasonable and genuine. On the other hand, Acme’s lawyers have an interest in preventing the disclosure of incorrect legal advice, which could not only prove embarrassing but also expose them to liability. And even if their advice was defensible, lawyers do not like to have their legal work, including their internal law firm communications, produced in discovery -- and potentially dissected by competing firms. And, like everyone, lawyers have a natural aversion to testifying, or to making themselves the focus of litigation. This all means that defense firms that also serve as corporate counsel have enormous incentives to avoid having their clients introduce evidence about their legal work, even if that evidence is plainly in the clients’ interest. These defense firms are motivated, consciously or not, to steer the clients away from a defense based on reliance on legal advice -- something that may be easy to do without many questions being asked, because of the general bias against revealing privileged information. This may not result in substantial prejudice if there are good defenses otherwise, but no doubt there is prejudice in many cases, which is largely (if not entirely)  invisible to the client -- through, for example, higher settlement amounts than would otherwise be necessary, or pressure to settle a case that might otherwise be a good trial candidate. So why do companies hire their corporate counsel so often? I’d say there are three reasons. First, it’s fair to say that outside counsel law firms don’t routinely go through this kind of analysis with their clients, before asking that they be hired to defend a securities class action. Few companies have been through securities class actions, so they need to be guided through this analysis in a candid fashion. At most, regular outside counsel discusses the lawyer-as-witness problem, and correctly notes that it’s common for regular outside counsel to defend securities claims. Second, companies often regard securities class actions as frivolous and don’t take the counsel-selection process as seriously as they should. Most companies think their case will be dismissed, so there won’t ever be any conflict issues, and it is safe to just hand the lawsuit off to their regular firm. Third, firms tell companies that if a case does not get dismissed, it will settle -- so, again, conflict issues will never arise. Because the conflicts that arise from these situations are largely invisible to the clients and the carriers, and any visible effects -- such as potentially higher settlements -- cannot be measured, there is no outcry against the practice. But the fact that the harm is difficult to detect or measure doesn’t mean it doesn’t exist, or that it is not potentially significant in some cases. All of the above problems are exacerbated when a company hires its regular outside firm without even interviewing other firms. In failing to interview other firms, companies fail to get an outside reality check regarding conflict issues, miss out on the free legal advice they will receive from the firms they interview and give up the leverage they have during the selection process to get economic concessions from the firm that they ultimately hire. In addition, without an audition process, companies have no way to compare the securities litigators from its regular outside firm with other securities litigators, and sometimes unknowingly engage less effective and efficient lawyers than they would if they simply took a half a day to interview a handful of firms. There is a simple, common-sense remedy: The company should conduct an interview process during which it can ask other firms about the regular outside firm’s conflict (taking into account those firms’ interest in being hired) -- a process that, as noted above, has advantages for the company anyway. Alternatively, the company can engage securities litigation defense counsel who isn’t under consideration for the defense role to advise on the issue. Under either procedure, the company should also seek advice from its insurers and broker, who have a unique and helpful perspective as “repeat players” in securities litigation, having typically been involved in a very large number of securities litigation matters. Whoever does this analysis needs to think past the initial complaint to the claims that are likely to be asserted by the lead plaintiff in a consolidated complaint. For example, if a class-period 10-K contains disclosures that are causally related to the reason the stock dropped, the analysis should consider the 10-K even if it isn’t mentioned in the initial complaint, because the lead plaintiff is likely to challenge it. Or if there are class-period stock sales, the analysis should take them into account, even if the initial complaint doesn’t mention them. If regular outside counsel were to advise their corporate clients to obtain counsel-selection advice through an audition process or an independent firm, as well as from their insurers and broker, they would do great service to their clients, in ensuring that the clients received the maximum amount of protection possible from their appropriate reliance on the advice of counsel to navigate the difficult waters of disclosures and stock sales. Significant potential harm, albeit largely invisible and unmeasurable, can be avoided by simply insisting upon an impartial counsel-selection process that allows the client to evaluate the full spectrum of potential conflicts. Even if the company and its directors and officers end up selecting the company’s regular outside counsel, the benefits of the selection process will most certainly serve the company well throughout the litigation.

1. Mediation can save stress, time and money. 2. You can schedule a mediation at a time and place of the parties’ choosing -- no long waits for a court date. 3. Mediation is voluntary. 4. You can mediate a claim at any time, even while awaiting appeal or reconsideration. 5. You can choose your mediator. 6. You can choose the issues to resolve. 7. You will have the mediator’s undivided attention. 8. You will get as much time as needed for a thorough review of the issues. 9. Because there will be adequate time for development and resolution of the issues, multiple court appearances can be avoided. 10. The mediator does not make rulings; the mediator helps the parties come to an agreement. 11. The mediator can facilitate communication, even when the parties are hostile. 12. The parties control the outcome in mediation. 13. Mediation is private. California law is strong in protecting the confidentiality of communications made in mediation. 14. Parties can be more frank with the mediator than in litigation or direct communication with the opposing party. The mediator can filter and re-frame parties’ concerns to help them reach settlement. 15. Parties are more satisfied with a mediated result than a court ruling.

No insurance IT project can be 100% successful from the outset, but there are many ways a project can head for failure almost as soon as it starts. Without proper discipline from all team members, clear direction from leadership and effective inter- and intra-team communication, a project can derail and become unmanageable or even chaotic before anybody realizes what happened. A few simple but effective guidelines can help project managers of any experience level keep their project headed toward success. First, establishing priorities or core and auxiliary features is paramount to success. Properly balancing the customer’s wants and the project’s needs is rarely an easy task, especially considering the lenses through which business and IT view an application. Initial feature planning starts with brainstorming and adding any ideas to a master “wish list.” With time and effort, the wish list will materialize as usable features added to a functional application.  Anything on the list should be considered fair game for development, but not everything can be accomplished at once. Develop core features before tackling ancillary ones. By attempting to achieve everything too soon, you will achieve nothing.  That lesson is often forgotten. Second, having a controlled, disciplined development cycle is crucial. It is imperative to avoid the temptation to release an application that features every item on a wish list or fixes every known bug. Adding more features and improvements can quickly increase the length of a development cycle. A “big bang” approach to software development, wherein a more ambitious set of goals is attempted over a longer period, has a higher chance of failure. It is better to develop, thoroughly test and deploy one or two new features in two months than to have three or four features still in development in the same time frame. By keeping on task with more short-term goals instead of attempting a larger and more grandiose release, teams can achieve a sense of satisfaction through regular releases and easy wins. End-users will also feel with a regular release schedule that their needs are being addressed, that they are not using dead or unsupported software and that there are even better features coming in the future. Third, once a project plan has been agreed upon, assigning tasks or entire tracks of work with a clear owner will force team members to remain accountable. This requires strong leadership. Each team member -- including developers, team leads, business users and the project manager -- must have a set of defined and realistic goals within a development cycle. Having to answer for one’s actions and decisions can force more effective communication between groups and can facilitate problem-solving within the team. Without realistic and relatively static goals, efforts can seem futile, which can lead to lower team morale and productivity. As a consequence, trust erodes between team members, and problem-solving becomes fingerpointing. Because some of these points may seem obvious, they may be taken for granted. Don’t assume anything! A successful project-management strategy must include a conscious effort to prevent potentially problematic behaviors and practices while sticking to proven success factors.

What independent discovery rights do parties have in a contested workers’ compensation claim in California? The system is so complex that foundational education about discovery rights is required to improve and advocate for proper public policy and behavior by participants. This article is offered as a means to educate all parties about their discovery rights.

The law and the courts have stated that each party is entitled to a complete, accurate and documented record of all aspects of their case. This includes employment records, medical reports, accident records, claim files, etc. The right to obtain, review and prepare the record for any legal action is performed by discovery.

Discovery can be defined as processes used for obtaining information and copies of all legally relevant documents between parties or non-parties in a court proceeding as a legal requirement of the courts, before trial. The court in Fairmont Ins. Co. v. Superior Court, (2000) 22 Cal.4th 245 defined what happens if the right of discovery is not afforded parties. It states: “Without an opportunity for discovery as of right, parties would face substantial barriers to effective trial preparation, with results inimical to the overall purpose of the discovery statutes to reduce litigation costs, expedite trials, avoid surprise, and encourage settlement.”

The Federal Rules of Civil Procedure (1938) have been updated and annotated by James William Moore as well as numerous judges, lawyers and scholars and are the most referred to rules of legal procedure. Moore's Federal Practice (1997), 3rd Ed., vol. 4, pp. 1014-1016, lists what discovery is intended to accomplish: -- to give greater assistance to the parties in ascertaining the truth and in checking and preventing perjury; -- to provide an effective means of detecting and exposing false, fraudulent and sham claims and defenses; -- to make available, in a simple, convenient and inexpensive way, facts that otherwise could not be proved except with great difficulty; -- to educate the parties in advance of trial as to the real value of their claims and defenses, thereby encouraging settlements; -- to expedite litigation; -- to safeguard against surprise; -- to prevent delay; -- to simplify and narrow the issues; -- to expedite and facilitate both preparation and trial.

Thus, the scope of permissible discovery is one of reason, logic and common sense. In Glenfed Dev. Corp. v Superior Court, (1997) 53 CA 4th 1113, the court wrote that California's “pretrial discovery procedures are designed to minimize the opportunities for fabrication and forgetfulness, and to eliminate the need for guesswork about the other side's evidence, with all doubts about discoverability resolved in favor of disclosure.”

The legislature enacted California Code of Civil Procedure, also referred to as the California Civil Discovery Act (1986). §2019.010, which lists ways a party may obtain discovery: “Any party may obtain discovery by one or more of the following methods: (a) Oral and written depositions, (b) Interrogatories to a party, (c) Inspections of documents, things and places, (d) Physical and mental examinations, (e) Requests for admissions, (f) Simultaneous exchanges of expert trial witness information.

§2031 reads: “The court in which an action is pending may: -- order any party to produce and permit the inspection and copying or photographing, by or on behalf of the moving party, of any designated documents, papers, books, accounts, letters, photographs, objects or tangible things, not privileged, which constitute or contain evidence relating to any of the matters within the scope of the examination permitted by subdivision (b) of Section 2016 of this code and which are in his possession, custody, or control; or -- order any party to permit entry upon designated land or other property in his possession or control for the purpose of inspecting, measuring, surveying or photographing the property or any designated object or operation thereon within the scope of the examination permitted subdivision (b) of Section 2016 of this code. The order shall specify the time, place, and manner of making the inspection and taking the copies and photographs and may prescribe such terms and conditions as are just." [56 Cal.2d 370]

California Code of Civil Procedure Section 2017(a) states that “unless otherwise limited by order of the court in accordance with this article, any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence. Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action.”

In Irvington-Moore, Inc. v. Superior Court, (1993) 14 Cal.App.4th 733, the court states that “in establishing the statutory methods of obtaining discovery, the legislature intended that discovery be allowed whenever consistent with justice and public policy” for all litigation actions. It further states: “a party may demand that any other party produce and permit the party making the demand, or someone acting on the party’s behalf, to inspect and to copy a document that is in the possession, custody, or control, or control of the party on whom the demand is made.”

The same court relied on Greyhound Corp. v. Superior Court (1961), 56 Cal.2d 355, 382-383, 388 as to how statutes must be viewed, stating: “The statutes must be liberally construed in favor of discovery, and the courts must not extend the limits on discovery beyond those expressed by the legislature.

Other than to protect against possible abuse, the legislature did not differentiate between the right to one method of discovery and another, but intended the right to use each of the various vehicles of discovery to be inherently the same.

Selection of the method of discovery is made by the party seeking discovery; it cannot be dictated by the opposing party.”

The Discovery Act of 1986 codifies the liberal discovery concept providing a bona fide right for parties to conduct independent discovery in every litigated matter.

The Glenfed Dev. Corp. v. Superior Court, supra, court crystallized relevance. “In the context of discovery, evidence is 'relevant' if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating a settlement. Admissibility is not the test, and it is sufficient if the information sought might reasonably lead to other, admissible evidence.” (See also, Lipton v. Superior Court (1996) 48 Cal.App.4th 1599, 1611-1612).

One of the most significant cases for discovery in the workers’ compensation arena is Patricia Ann Hardesty et al., (John D. Hardesty, Jr., deceased), v. McCord & Holdren, Inc. and Industrial Indemnity Company (1976) 41 CCC 111. The ruling is: “Each party to a workers' compensation proceeding must make available to the other party for inspection all non-privileged statements of witnesses which are in his possession, or which might come into his possession before the time of trial, since the denial of discovery of non-privileged statement would unfairly prejudice the opposing party in preparing his case and would unduly expose him to the danger of surprise at trial.”

Labor Code §5710 is the authority on California workers’ compensation for taking the deposition of applicants, physicians, experts, employers and claims adjusters. (Note: Deposition can mean either the oral taking of a statement under oath or deposing of records).

§5710 reads: “The appeals board, a workers’ compensation judge, or any party to the action or proceeding, may, in any investigation or hearing before the appeals board, cause the deposition of witnesses residing within or outside the state to be taken in the manner prescribed by law of like depositions in civil actions in the superior courts of this state under Title 4 of Part 4 (commencing with Section 2016.010) of Part 4 of the Code of Civil Procedure.”

Case law supports the right of parties to subpoena records. This right can be found in Irvington-Moore, Inc. v. Superior Court. It states: “A party may demand that any other party produce and permit the party making the demand, or someone acting on the party’s behalf, to inspect and to copy a document that is in the possession, custody or control of the party on whom the demand is made.”

In workers’ compensation, the most common form of discovery to develop the record is obtained through documented business and medical records and witness depositions.

The right to issue a subpoena is found in California Evidence Code §1560(e), which states: “The subpoenaing party in a civil action may direct the witness to make the records available for inspection or by copying by the party’s attorney, the attorney’s representative or deposition officer as described in Section 2020.420 of the Code of Civil Procedure, at the witness’ business address under reasonable conditions during normal business hours.”

Subpoena rights are also buttressed by Workers’ Compensation Title 8 Regulation §10530: “The Workers' Compensation Appeals Board shall issue subpoenas and subpoenas duces tecum upon request in accordance with the provisions of Code of Civil Procedure sections 1985 and 1987.5 and Government Code section 68097.1.”

Workers’ Compensation Title 8 Regulation §10626 iterates: “Except as otherwise provided by law, all parties, their attorney, agents and physicians shall be entitled to examine and make copies of all or any part of physician, hospital or dispensary records that are relevant to the claims made and the issues pending in a proceeding before the Workers’ Compensation Appeals Board.”

Subpoena duces tecum means: "bring with you under penalty of law" and compels the party or non-party custodians of record to bring records that they have and to verify to the court that the documents or records have not been altered.

California Code of Civil Procedure §1985(c) states that: “The clerk, or a judge, shall issue a subpoena or subpoena duces tecum signed and sealed but otherwise in blank to a party requesting it, who shall fill it in before service.

An attorney at law who is the attorney of record in an action or proceeding, may sign and issue a subpoena to require attendance before the court in which the action or proceeding is pending or at the trial of an issue therein, or upon the taking of a deposition in an action or proceeding pending therein; the subpoena in such a case need not be sealed.

An attorney at law who is the attorney of record in an action or proceeding, may sign and issue a subpoena duces tecum to require production of the matters or things described in the subpoena.”

Title 8 Regulation §10530 provides for the WCAB issue subpoenas and subpoenas duces tecum upon request. Subpoenas for records are sent to one or multiple businesses.

California Evidence Code §1270 identifies meanings for business and evidence. “As used in this article, "a business" includes every kind of business, governmental activity, profession, occupation, calling or operation of institutions, whether carried on for profit or not.” This same code defines business record and the requirement that they are made under oath as to authenticity.

Section 1271 states: “Evidence of a writing made as a record of an act, condition or event is not made inadmissible by the hearsay rule when offered to prove the act, condition or event if: (a) The writing was made in the regular course of a business; (b) The writing was made at or near the time of the act, condition, or event; (c) The custodian or other qualified witness testifies to its identity and the mode of its preparation; and (d) The sources of information and method and time of preparation were such as to indicate its trustworthiness.”

California Evidence Code §1560(e) states: “as an alternative to the procedures described in subdivisions (b), (c), and (d), the subpoenaing party in a civil action may direct the witness to make the records available for inspection or copying by the party's attorney, the attorney's representative, or deposition officer as described in Section 2020.420 of the Code of Civil Procedure.”

California Code of Civil Procedure §1985.3(a)(4) defines deposition officer as a person who meets the qualifications specified in Section 2020.420. The qualification states: “The officer for a deposition seeking discovery only of business records for copying under this article shall be a professional photocopier registered under Chapter 20 (commencing with Section 22450) of Division 8 of the Business and Professions Code, or a person exempted from the registration requirements of that chapter under Section 22451 of the Business and Professions Code. This deposition officer shall not be financially interested in the action, or a relative or employee of any attorney of the parties.”

California Business and Professions Code §22458 states: “A professional photocopier shall be responsible at all times for maintaining the integrity and confidentiality of information obtained under the applicable codes in the transmittal or distribution of records to the authorized persons or entities” and able to swear under oath as to its authenticity, establishing the proper evidential chain of custody.

The substantial evidence rule is applied by the California Appellate Court to the Workers’ Compensation Board decision. The substantial evidence rule is a principle that a reviewing court should uphold an administrative body's ruling if it is supported by evidence on which the administrative body could reasonably base its decision. "Substantial" means that the evidence must be of ponderable legal significance. It must be reasonable in nature, credible and of solid value; it must actually be substantial proof of the essentials that the law requires in a particular case.

Citing Petrocelli v. Workmen's Comp. Appeals Bd. (1975) 45 Cal.App.3d 635, the California Appellate Court in Georgia-Pacific Corp. v. Workers' Comp. Appeals Bd., (1983) 144 Cal.App.3d 72, wrote that “the respondent board's decision to uphold the finding of the workers’ compensation judge should not be disturbed where supported by substantial evidence or fairly drawn inferences . . .” -- thereby demonstrating that Appellate Court findings can set precedent on an administrative order/finding.

A party must be able to conduct independent discovery, or the case will not be litigated based on a complete and accurate record, which is a violation of the due process of law. (U.S. Const. amend. IV and XIV).

I was wandering around my yard after dinner the other night, half-heartedly taking inventory of the garden chores I had been dodging, when I noticed some kids playing kickball across the street. There were six of them, three per team, and they were pretty good kickers, so they were doing a lot of base running. I chuckled when the tall kid standing on third base yelled, "Invisible man on third!" He then jogged to home plate to kick, while teammates stayed on first and second bases. Bases loaded, invisible man on third! I hadn't heard that proclamation for a long time, but if you have ever played kickball, stickball, baseball or softball with teams of three or fewer, you know all about the invisible man. That kickball game got me thinking about invisibility as an attribute in planning and operations and personal behavior. Invisibility is the goal of many corporate security protocols, to protect sensitive information, to preserve privacy and confidentiality and to shield intellectual property from attack or discovery. The hope is to camouflage activities by providing cover or anonymity. Sometimes, an individual hopes to act behind the scenes or otherwise conceal activities. Other times, invisibility is an incidental factor, because of negligence or inadvertence. Folks aren't paying attention, and ownership, accountability and decision rights don't get clearly established. My first encounter with a corporate version of the invisible man came decades ago while I was working as a claims supervisor for a large insurer in Massachusetts. The job was tough, largely because the supervisor was responsible for monitoring and directing a hefty and constantly shifting portfolio of claims toward timely and appropriate resolution. Theoretically, the supervisor assigned the claims to handlers who moved them through the phases -- investigation, evaluation and resolution -- but sometimes there just weren't enough available to handle all the claims. Turnover, training, vacations, hiring freezes, an increasing volume of new claims -- any one of these things could create a situation where there were too many claims and not enough claim handlers. The solution? At that particular company, the solution was Mr. X. Mr. X had a diary number and carried a large caseload of slow-moving claims reassigned from other claim handlers. Every claims supervisor had a Mr. X on staff. He was imaginary and invisible, so he wasn't able to accomplish anything on the claims, but reassigning work to Mr. X let real claims handlers take on more new claims. Mr.X was an operating imperative. Years later, I bumped into Mr. X's cousins at a third party claims administrator in New Jersey. The TPA had guaranteed its clients that claims workloads would not exceed a certain number per claim handler. As the end of the month approached, if workloads were higher than promised, the TPA claims supervisors would reassign claims to themselves or to their office managers to reduce the claim handlers' workloads to the agreed number. Of course, the supervisors and manager weren't imaginary or invisible, but they may as well have been because they did not actually work on the claims assigned to them. They were simply placeholders until after month end, at which point the claims would be reassigned to the claims handlers. Invisible men also show up -- or, rather, don't show up -- on committees. Radio and TV journalist Richard Harkness is credited with drafting this definition of a committee: "A group of the unwilling, picked from the unfit, to do the unnecessary." While I think that characterization is a bit severe, I have probably been on too many committees, so I believe it is fair to say that most committees have at least one member who fails to attend meetings and contributes little or nothing to the committee's work. That's awkward enough, but when the invisible committee member also happens to be the committee chair, it is even more awkward. I remember working on a committee in New York where the chair would schedule a meeting, then miss the meeting at the last minute because of a vague, recurring malady he described only as "man flu." The committee would meet without him, cover the agenda and provide him with the minutes, then he would schedule another meeting and at the last minute. . . ,well, you have probably lived this dream yourself. The chair took credit for the committee's work, yet he never contributed anything. I have seen the same type of incidental invisibility in large-scale technology development and implementation projects, where it is frequently difficult to determine who, if anyone, actually "owns" the project. I always ask two questions: 1) Has any one person actually been told to set direction, manage obstacles and make decisions on the project? 2) Is there a real person who knows and understands she will be held accountable if things don't work out as expected? It is usually easy to identify the project sponsor and the steering committee and the subject matter experts and the IT folks who are managing the project, but the project owner is often not visible. Why? Either project ownership responsibility was never specifically assigned or, more likely, ownership was assigned to a committee. Psychologist Will Schutz was no doubt thinking of something else when he wrote this, but he did a good job of describing the inevitable, unfortunate outcome when an owner-less or committee-owned project fails to meet expectations: "Everyone is responsible, but no one is to blame." It is even worse when the wrong person or department is identified as the owner. I think it is crazy for human resources executives to own an employee engagement project, for example, or for IT executives to own a technology development or implementation project. These are business projects, and they should be owned by the business leader who convinced the organization that he had a problem or an opportunity, and that the project was the solution. Sure, HR and IT are there to assist, to provide expertise, structure, oversight and maybe even project management, but the business person owner needs to remain visible and accountable.