Tag Archives: networking

Women in Business: the Network Paradox

Women know we thrive when we are together. All the way back to ancient times — in the red tent or carrying water from the river — women have relied on each other for support, encouragement and help with basic survival.

Nonetheless, women today report feeling isolated at work and have trouble breaking into the professional networks and sponsors critical to their career advancement.

Recent data collected in a comprehensive study tracking various trends related to women in global corporate leadership revealed women are three times more likely to rely on networks made up of mostly women. Because men hold more senior positions than women do, women only associating with women limit their access to leaders who can open doors to advancement in their careers.

Paradoxically, women choose to rely on other women and thrive when they rely on other women, but the very reliance on other women limits their career opportunities. For ease of conversation, I’ll label this the “network paradox,” and I’ll describe it as a problem.

See also: Value in Informal Employee Networks  

The accepted solution to the network paradox is to integrate women into the well-established, centuries-old male network. Men have built a robust and extensive professional network, and most successful male executives have figured out how to tap into it. Research shows men have more interaction with senior managers, have more access to challenging and career-advancing assignments, are consulted more often for input on major decisions and receive informal feedback significantly more often than women.

Understandably, people view this disparity as unfair, and, consequently, workplaces are devoted to creating a gender-neutral environment. In addition to training programs, HR departments manufacture mentoring relationships between men and women, create specific and detailed hiring and review processes that are viewed as gender-neutral and set goals for senior executives focused on accountability and results. The underlying assumption is that if it’s the male network that creates an advantage, we should include women in that network on an equal basis.

At the risk of sounding too negative, that approach is never going to work. In response to the realization that because women thrive together and are significantly more likely to network with other women, we have decided the solution is to put women with men and hold people accountable for ignoring the fact that they are women. Put more positively, we want to create an integrated network that benefits men and women, and we have set about adding women to the existing framework.

I propose that, instead, we should first build a network of women.

The prevailing solution ignores the essence of the paradox: Women strongly prefer to network with other women. Despite overwhelming evidence that the male-dominated network is more effective at creating career paths to leadership, women are three times more likely to network with other women. Let’s respect that and put it to good use. Women in corporate leadership are isolated from each other. Companies have, at most, a few women in senior leadership. But across all companies, there are many women leaders who should be brought together. Circling back to my opening remark, women throughout history have thrived when they spend time together.

A network of women will function in the same way the male network functions today. Women with deep and enduring relationships will support each other, make introductions for each other, mentor each other, provide informal feedback, steer career-making opportunities to each other and fundamentally generate power and influence for the group. As a first step, building this network does not require creating artificial relationships; data shows women naturally gravitate toward each other for this purpose. What is required is a commitment by senior executives to the goal — and a focus on accountability and results.

See also: Why Women Are Smarter Than Men  

The insurance and technology industries, both of which have a dearth of women in leadership, are the perfect industries to lead the world through this paradox to the future.

In insurance and financial services, 57% of the entering workforce is female and only 21% of top executives are. In technology, the entering workforce is 36% female and only 19% of top executives are. More pressingly, as the demand for tech workers increases every year, the number of women entering the field decreases, creating a deficit of qualified workers to fill available jobs.

Redirecting resources from the futile exercise of manufacturing and monitoring artificial gender-neutral access to the existing male-dominated network to the creation of a network of women will organically equalize what men and women are experiencing at work.

parties

In Third Parties We (Mis)trust?

Technology is transforming trust. Never before has there been a time when it’s been easier to start a distant geographical relationship. With a credible website and reasonable products or services, people are prepared to learn about companies half a world away and enter into commerce with them.

Society is changing radically when people find themselves trusting people with whom they’ve had no experience, e.g. on eBay or Facebook, more than with banks they’ve dealt with their whole lives.

Mutual distributed ledgers pose a threat to the trust relationship in financial services.

The History of Trust

Trust leverages a history of relationships to extend credit and benefit of the doubt to someone. Trust is about much more than money; it’s about human relationships, obligations and experiences and about anticipating what other people will do.

In risky environments, trust enables cooperation and permits voluntary participation in mutually beneficial transactions that are otherwise costly to enforce or cannot be enforced by third parties. By taking a risk on trust, we increase the amount of cooperation throughout society while simultaneously reducing the costs, unless we are wronged.

Trust is not a simple concept, nor is it necessarily an unmitigated good, but trust is the stock-in-trade of financial services. In reality, financial services trade on mistrust. If people trusted each other on transactions, many financial services might be redundant.

People use trusted third parties in many roles in finance, for settlement, as custodians, as payment providers, as poolers of risk. Trusted third parties perform three roles:

  • validate – confirming the existence of something to be traded and membership of the trading community;
  • safeguard – preventing duplicate transactions, i.e. someone selling the same thing twice or “double-spending”;
  • preserve – holding the history of transactions to help analysis and oversight, and in the event of disputes.

A ledger is a book, file or other record of financial transactions. People have used various technologies for ledgers over the centuries. The Sumerians used clay cuneiform tablets. Medieval folk split tally sticks. In the modern era, the implementation of choice for a ledger is a central database, found in all modern accounting systems. In many situations, each business keeps its own central database with all its own transactions in it, and these systems are reconciled, often manually and at great expense if something goes wrong.

But in cases where many parties interact and need to keep track of complex sets of transactions they have traditionally found that creating a centralized ledger is helpful. A centralized transaction ledger needs a trusted third party who makes the entries (validates), prevents double counting or double spending (safeguards) and holds the transaction histories (preserves). Over the ages, centralized ledgers are found in registries (land, shipping, tax), exchanges (stocks, bonds) or libraries (index and borrowing records), just to give a few examples.

The latest technological approach to all of this is the distributed ledger (aka blockchain aka distributed consensus ledger aka the mutual distributed ledger, or MDL, the term we’ll stick to here). To understand the concept, it helps to look back over the story of its development:

 1960/’70s: Databases

The current database paradigm began around 1970 with the invention of the relational model, and the widespread adoption of magnetic tape for record-keeping. Society runs on these tools to this day, even though some important things are hard to represent using them. Trusted third parties work well on databases, but correctly recording remote transactions can be problematic.

One approach to remote transactions is to connect machines and work out the lumps as you go. But when data leaves one database and crosses an organizational boundary, problems start. For Organization A, the contents of Database A are operational reality, true until proven otherwise. But for Organization B, the message from A is a statement of opinion. Orders sit as “maybe” until payment is made, and is cleared past the last possible chargeback: This tentative quality is always attached to data from the outside.

1980/’90s: Networks

Ubiquitous computer networking came of age two decades after the database revolution, starting with protocols like email and hitting its full flowering with the invention of the World Wide Web in the early 1990s. The network continues to get smarter, faster and cheaper, as well as more ubiquitous – and it is starting to show up in devices like our lightbulbs under names like the Internet of Things. While machines can now talk to each other, the systems that help us run our lives do not yet connect in joined-up ways.

Although in theory information could just flow from one database to another with your permission, in practice the technical costs of connecting databases are huge. Worse, we go back to paper and metaphors from the age of paper because we cannot get the connection software right. All too often, the computer is simply a way to fill out forms: a high-tech paper simulator. It is nearly impossible to get two large entities to share our information between them on our behalf.

Of course, there are attempts to clarify this mess – to introduce standards and code reusability to help streamline business interoperability. You can choose from EDI, XMI-EDI, JSON, SOAP, XML-RPC, JSON-RPC, WSDL and half a dozen more standards to “assist” your integration processes. The reason there are so many standards is because none of them finally solved the problem.

Take the problem of scaling collaboration. Say that two of us have paid the up-front costs of collaboration and have achieved seamless technical harmony, and now a third partner joins our union, then a fourth and a fifth … by five partners, we have 13 connections to debug, by 10 partners the number is 45. The cost of collaboration keeps going up for each new partner as they join our network, and the result is small pools of collaboration that just will not grow. This isn’t an abstract problem – this is banking, this is finance, medicine, electrical grids, food supplies and the government.

A common approach to this quadratic quandary is to put somebody in charge, a hub-and-spoke solution. We pick an organization – Visa would be typical – and all agree that we will connect to Visa using its standard interface. Each organization has to get just a single connector right. Visa takes 1% off the top, making sure that everything clears properly.

But while a third party may be trusted, it doesn’t mean it is trustworthy. There are a few problems with this approach, but they can be summarized as “natural monopolies.” Being a hub for others is a license to print money for anybody that achieves incumbent status. Visa gets 1% or more of a very sizeable fraction of the world’s transactions with this game; Swift likewise.

If you ever wonder what the economic upside of the MDL business might be, just have a think about how big that number is across all forms of trusted third parties.

2000/’10s: Mutual Distributed Ledgers

MDL technology securely stores transaction records in multiple locations with no central ownership. MDLs allow groups of people to validate, record and track transactions across a network of decentralized computer systems with varying degrees of control of the ledger. Everyone shares the ledger. The ledger itself is a distributed data structure held in part or in its entirety by each participating computer system. The computer systems follow a common protocol to add transactions. The protocol is distributed using peer-to-peer application architecture. MDLs are not technically new – concurrent and distributed databases have been a research area since at least the 1970s. Z/Yen built its first one in 1995.

Historically, distributed ledgers have suffered from two perceived disadvantages; insecurity and complexity. These two perceptions are changing rapidly because of the growing use of blockchain technology, the MDL of choice for cryptocurrencies. Cryptocurrencies need to:

  • validate – have a trust model for time-stamping transactions by members of the community;
  • safeguard – have a set of rules for sharing data of guaranteed accuracy;
  • preserve – have a common history of transactions.

If faith in the technology’s integrity continues to grow, then MDLs might substitute for two roles of a trusted third party, preventing duplicate transactions and providing a verifiable public record of all transactions. Trust moves from the third party to the technology. Emerging techniques, such as, smart contracts and decentralized autonomous organizations, might in future also permit MDLs to act as automated agents.

A cryptocurrency like bitcoin is an MDL with “mining on top.” The mining substitutes for trust: “proof of work” is simply proof that you have a warehouse of expensive computers working, and the proof is the output of their calculations! Cryptocurrency blockchains do not require a central authority or trusted third party to coordinate interactions, validate transactions or oversee behavior.

However, when the virtual currency is going to be exchanged for real-world assets, we come back to needing trusted third parties to trade ships or houses or automobiles for virtual currency. A big consequence may be that the first role of a trusted third party, validating an asset and identifying community members, becomes the most important. This is why MDLs may challenge the structure of financial services, even though financial services are here to stay.

Boring ledgers meet smart contracts

MDLs and blockchain architecture are essentially protocols that can work as well as hub-and-spoke for getting things done, but without the liability of a trusted third party in the center that might choose to exploit the natural monopoly. Even with smaller trusted third parties, MDLs have some magic properties, the same agreed data on all nodes, “distributed consensus,” rather than passing data around through messages.

In the future, smart contracts can store promises to pay and promises to deliver without having a middleman or exposing people to the risk of fraud. The same logic that secured “currency” in bitcoin can be used to secure little pieces of detached business logic. Smart contracts may automatically move funds in accordance with instructions given long ago, like a will or a futures contract. For pure digital assets there is no counterparty risk because the value to be transferred can be locked into the contract when it is created, and released automatically when the conditions and terms are met: If the contract is clear, then fraud is impossible, because the program actually has real control of the assets involved rather than requiring trustworthy middle-men like ATM machines or car rental agents. Of course, such structures challenge some of our current thinking on liquidity.

Long Finance has a Zen-style koan, “if you have trust I shall give you trust; if you have no trust I shall take it away.” Cryptocurrencies and MDLs are gaining more and more trust. Trust in contractual relationships mediated by machines sounds like science fiction, but the financial sector has profitably adapted to the ATM machine, Visa, Swift, Big Bang, HFT and many other innovations. New ledger technology will enable new kinds of businesses, as reducing the cost of trust and fixing problems allows new kinds of enterprises to be profitable. The speed of adoption of new technology sorts winners from losers.

Make no mistake: The core generation of value has not changed; banks are trusted third parties. The implication, though, is that much more will be spent on identity, such as Anti-Money-Laundering/Know-Your-Customer backed by indemnity, and asset validation, than transaction fees.

A U.S. political T-shirt about terrorists and religion inspires a closing thought: “It’s not that all cheats are trusted third parties; it’s that all trusted third parties are tempted to cheat.” MDLs move some of that trust into technology. And as costs and barriers to trusted third parties fall, expect demand and supply to increase.

10 Commandments for Young Professionals

  1. Thou shalt start working on CPCU right away, and join the society.
  2. Thou shalt network often both in the company and in the industry.
  3. Thou shalt seek at least one mentor.
  4. Thou shalt never think of thyself as an hourly employee; for young professionals, that is merely a temporary condition.
  5. Thou shalt honor traditions while always challenging the status quo.
  6. Thou shalt make friends in IT and claims and with the admins of the leaders you admire.
  7. Thou shalt always keep an up-to-date LinkedIn profile.
  8. Thou shalt read the Insurance Journal, PC360, National Underwriter, Insurance Thought Leadership and a trade journal for your corner of the industry.
  9. Thou shalt never bad mouth insurance in public.
  10. Thou shalt encourage other talented people to join our industry.
  11. A bonus one: Thou shalt follow Tony Canas on TwitterFacebook and LinkedIn!

Special thanks to Carly Burnham, CPCU, Avolyn FisherTaylor ReedAndrew Holland, CPCU and Andrew Cross, who helped edit this list.