Tag Archives: politics

Don’t Neglect the Politics of Analytics

To complement recent advice from our guest bloggers, let’s consider the political dimension of applying analytics in business.

Annette and Peter have shared useful tips on applying analytics for both customer experience and marketing. However, unlike in the classroom, advancing such use of analytics in business always involves politics.

Over the years, as well as protecting technical stars from performance management systems, I have often had to mentor them on politics. Analysts can be idealistic and naive when it comes to the political dimension of office life.

So, in this post, I suggest a simple framework to bear in mind when interacting with your stakeholders. I hope it helps you navigate the political dimension, or to coach your team to do so.

A framework for the political dimension of stakeholders

I have shared before on the importance of mapping your stakeholders and segmenting them, so you can adjust your style to suit them. Beyond this, there is a need to be aware of the political dimension and to act accordingly.

Now, the precise details of political implications and game playing in each organization will vary. You will know better than I do what are long-term versus short-term priorities and how different stakeholders might be affected.

What I want to share is a framework for identifying where political considerations matter and for which stakeholders.

The 2×2 grid was developed by Simon Baddeley (Birmingham University) and Kim Turnball James (now at Cranfield). It is based on their research within the domain of local government, but their findings accord with my experience of working in large corporations.

Their analysis of research findings led them to segment people into one of the following four quadrants. These are defined by the twin dimensions of reading (political awareness – ability to read what is really going on) and carrying (political actions – for good or ill). Using those two axes, they identify four clear segments into which your stakeholders may fall:

  1. Innocent stakeholders (like naive sheep)
  2. Inept stakeholders (like inept asses)
  3. Clever but untrustworthy stakeholders (like cunning foxes)
  4. Wise stakeholders (like the proverbial owls)

Let’s consider each quadrant in turn and their implications for managing stakeholders when deploying analytics.

Quadrant 1: Naive Sheep

The first point to make using this framework is to avoid being a sheep. Like lambs led to the slaughter, people in this quadrant are politically unaware, but innocent of any ulterior motive in their work. While potentially trustworthy, they can also all too easily be manipulated by others or become cynical and resentful of the organization.

Sadly, I all too often discover that this is the quadrant occupied by analysts or data scientists. One of the reasons for that is actually principled. I have lost count of the times I have heard analysts or even their leaders describe themselves as not doing politics or sick of politics. As with an idealistic government-in-waiting, this is not a viable strategy.

See also: Sentiment Analytics Can Drive Growth  

Avoiding politics is impossible in any walk of life, but especially large organizations. As Aristotle said “man is by nature a political animal.“ However, it is possible to be political without selling your soul (as this useful article from Harvard Business Review puts it).

The challenge for those who identify themselves in this quadrant is to wake up and smell the coffee. Recognize all the evidence that decisions (even important ones) are made for irrationalemotional and social reasons. Listen and watch more. Become more astute at understanding others’ goals, concerns and where they might feel threatened. Build trust and collaborate where there is mutual benefit.

When working with stakeholders in this quadrant, it can be helpful to propose more collaboration or socializing of their ideas before acting alone. Reassure them by sharing their ideas, but also ensuring they get the credit, even when you have done the networking. You may well become a trusted adviser for getting things done.

Quadrant 2: Inept Asses

Please note I am speaking about donkeys, not derrieres! These are people who lack political awareness, every bit as much as sheep, but do not have benign motives. Instead, they seek to play political games or manipulate situations to their advantage, while being embarrassingly obvious.

They are the David Brent of real world offices. Believing themselves to be players they just make fools of themselves and usually undermine the reputation of their teams.

Now we can all make mistakes in life. Errors of judgment. But, if you honestly self-identify in this segment, then the good news is that you have woken up to it. Apologies may be in order, but the most important thing to change will be your options. Stop trying to get one over on people. Start keeping your word and sharing to help others.

When working with stakeholders in this quadrant, two things are worth considering. First, for any recommendations, lead with what is in it for them. Emphasize how they could benefit or advance their careers if they get on board. At the same time, be careful. You need to ensure you do not tarnish your reputation by being too closely aligned with their manipulation. You should also ensure it is not easy for them to pass off your work as their own.

Quadrant 3: Cunning Foxes

Here we reach the true Machiavellian manipulators within your business. At the worst, this is where you will find sociopaths and the few who actually do come to work to hurt others. Less extreme versions include those who have risen to a level of power or control and enjoy playing the system.

Although such operators can appear glamorized in TV dramas, they can also leave a trail of destruction in their wake. I have personally witnessed a CFO who clearly took pleasure in humiliating and thwarting the efforts of certain middle managers. In these days of greater awareness around mental health at work and the alarming level of suicide among men under 50, we should be very concerned with such behavior.

I have painted a picture of the stereotypical macho boss. But such character traits can also be found in women leaders and in those who do not appear senior. Anyone who has worked in large businesses will know that individuals can also exert control from positions of expertise or influence that are not obvious from org charts.

It would surprise me if many of the readers of this blog self-identified as being in this segment. However, I have seen embittered cynicism manifest in some of these tendencies. If you find yourself thinking how you can get your revenge on others at work through the skills you have or ability to sabotage their work – stop. Don’t just think about the consequences if they found out, take time to reflect on the kind of person you want to become.

Unfortunately, it is not rare to discover some of these characters at senior levels in large corporations. Being effective political operators, they are also often ruthlessly ambitious.

If you identify some of the stakeholders you need to work with as being in this quadrant, then proceed with caution. A few tips may help you. Where possible, brief them before public meetings so they are not caught unawares (you do not want to corner them). At times, it may also make more sense to approach them in a more public setting, after you have secured the support of others you can trust. You should also consider what benefits for them you can highlight and whether it would work best to share those directly or in public. A personal pitch that you know fits with their plans or creates an opportunity may help complement a more public recommendation “in the interest of customers.”

Quadrant 4: Wise Owls

As with all effective 2×2 matrices, this top right corner is where you want to be, having developed the ability to see the different political agendas and plans at work in your business and still being in touch with your soul and secure enough to act in the best interests of others. Those characteristics often distinguish those who are thinking more long-term.

Age does not necessarily make one wise, but it might be worth considering if some of those older leaders in your business have wisdom to share. You can spot an owl by reputation. These are the leaders who are known as those who get things done, and people really want to work with them. They may not appear to be shining brightly at present, but you will find their advice being sought by people at all levels.

If you have managed to develop both a strong ability to read the office politics and flexible tactics to get the right things done – please consider developing your team. Too few of today’s technically expert managers (across data, analytics, data science and research) possess such skills. Effective transformation of businesses to be data-led and ethical may well rely on your mentoring a generation of leaders to develop such skills.

See also: 3-Step Approach to Big Data Analytics  

If you have the pleasure of working with leaders whom you identify as being in this quadrant, consider asking them to be your mentor. This may be even more valuable for you if they are in a completely different part of your business. One of the most effective ways to develop increased awareness of office politics and the good judgment of deciding when and how to act is with the help of a mentor. At the least, it would help to consult with such leaders before widely sharing potentially controversial analysis. They may well be able to advise how to influence others.

Are you a Sheep, Ass, Fox or Owl?

I hope you found those thoughts on the political dimension of office life useful. Which segment did you identify with? Has anything I’ve said changed your view of use of politics at work?

Why not dig out your stakeholder map and seek to place each of your key players in one of the above quadrants?

At the least, I hope this post has prompted you to think about your ability to read political behavior and your motivations in any covert tactics of your own. A greater ability to operate wisely and ethically within the reality of political workplaces could really advance the influence and benefits of much analytics or insight.

Could Your Agency Pass a Risk Audit?

2017 is here. Are you, your agency and your clients ready for the future? Are you managing your risks for the future like you have in the past? Are your advising your clients about managing their risks like you have in the past? Will this work tomorrow?

Our industry is very good at “managing” static risks (those unchanged by society). P&C agents are great at providing counsel or products to address issues of lawsuits and damage to property and loss of its use.

Life/financial services/group and individual benefit professionals can counsel or insure risk of death, unplanned aging, accident and sickness, unemployment and other contingencies (special needs child, etc.).

See also: Risk Management, in Plain English  

What follows focuses on some dynamic risks (those influenced by a changing society), including issues of politics, climate change, energy, economics, government intervention, math (sustainability and solvency), competition and demographics.

In the Bible in Luke 4:23, we read, “Physician heal thyself.” Those of us in the insurance world need to take that advice. In a world of dynamic change, insure (and assure) yourself and your clients for the future. Consider these “risks”:

  1. Politics — The election is over. Politics have changed. Two years ago, could you have predicted that the two presidential candidates in the 2016 election political blood bath would be very flawed candidates with 60% negatives? One who barely outran a democratic socialist, and the other who destroyed almost two dozen “traditional” candidates. Our country, economy and the world are dancing to a different beat.
  2. Climate change/natural disasters — I won’t debate if our climate is warming or trending toward the next ice age. I know bad stuff has been happening. Hurricanes, tornadoes, earthquakes (traditional or fracking), the 2016 great flood, droughts, etc. are causing mega-damage, and we the people (as taxpayers or premium payers) must pay for these losses. Money paid to cover losses of yesterday are not available in next year’s budget.
  3. Energy — This is a great place to work when oil is at $80 a barrel. At $40 a barrel, life is tough. Environmentalists think high gas prices are good. Many “working folks” don’t agree. The cost of the great debate on climate change will be paid by “we the people.” The cost will be high.
  4. Economy — Economics will drive tomorrow. Wages, unemployment, marketplace expectations, addiction to government, incentives for innovation (entrepreneurship) or taxing success will be issues. Brexit proved some folks aren’t enamored with the “global economy.” The U.S. presidential election showed the divide between the “more” and “less” government camps. Some want to tax the 1%. Others see the world as 47% as givers and 47% takers. Still others only use benefits, while some pay for benefits they never use. Yesterday’s economy can’t get us to tomorrow’s demands or possibilities.
  5. Government engagement is probably the biggest “insurance coverage” and expense we all pay. Think Medicare, Medicaid (as healthcare and nursing home reinsurer of last resort), VA, ACA, Social Security, NFIP and the U. S. as reinsurer of any disaster or “money need” that is not covered elsewhere. These “premiums” (taxes) are a huge drain on our resources.
  6. Math (sustainability and solvency) — Government programs like the ones mentioned above are like a pipeline. Taxpayers’ money flows in the front end of the line, and benefits flow out of the other end. Because of the political nature of all government programs, there is a valve on the front end of the line that is used to limit the number of dollars flowing in (we don’t want to anger the taxpayers who vote) and a valve on the back end of the line is opened wide to ensure maximum benefits (don’t want to anger beneficiaries who vote). Ultimately, all such systems collapse. Just look at the national debt. (The ACA is one example of the non-sustainability of good intentions.)
  7. Competition — Our industry was built on a Main Street model in a Father Knows Best world. It has survived and prospered. Unfortunately, some agents haven’t evolved while the world they live in has. We are in a Modern Family world shopping in a global economy where Main Street is not as much of an issue as Facebook, Google, Airbnb, Amazon, Uber, artificial intelligence (anticipating needs) and the next disruptive innovation.
  8. Millennials — The greatest generation, the Boomers, is exiting stage left. Now, the Gen Xers, Gen Yers and millennials are taking their place at the wheel. They are as different from me as they can be. This will change what, where, how and when you sell and how you are compensated.

See also: How to ‘Gamify’ Risk Management  

Think you’re ready for tomorrow? Think again…

Carpe mañana.

How Politics Drives Up Your MSA Costs

For President George W. Bush and Congress to get Medicare Part D drug coverage passed in 2003, they had to make significant concessions to big business, including the drug industry. One of the law’s provisions forbids the government from setting rules for negotiating better drug prices. The “noninterference” section says:

In order to promote competition . . . the secretary [of Health and Human Services]:
(1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP [prescription drug plan] sponsors; and
(2) may not require a particular formulary or institute a price structure for the reimbursement of covered Part D drugs.
42 USC 1395w-111(i)

The result, according to a new policy brief from the Carlton University School of Public Policy and Administration, is that Medicare Part D plans pay on average 73% more than Medicaid and 80% more than the Veterans Health Administration for brand-name drugs. If Part D plans could negotiate drug costs the way Medicaid and the VA do, savings could reach $16 billion a year.

The study shows that the average per capita expenditure by Americans for pharmaceuticals is more than double the average of 32 other industrialized nations. Contrary to their publicity, American drug companies do not devote the wealth gained from Part D on new research initiatives. Half of new medical research initiatives come from non-profit entities such as universities. Rather, drug companies have spent their millions in recent years on increased lobbying. If drug costs decreased, Medicare beneficiaries could expect Part D premiums to also decrease.

pills

Although private insurers pay Part D medical expenses, workers’ compensation professionals are painfully aware that anticipated Part D-covered expenses must be included in a Medicare Set-Aside. The increased use and rising cost of pharmaceuticals has torpedoed many a proposed workers’ compensation buy-out. If the purpose of an MSA is to protect Medicare, why are Part D expenses that are paid by private insurers included in the allocation anyway?

Casualty insurance companies and the American Association for Justice are big political players. With the 2016 election cycle coming up, now would seem to be the time for their lobbyists to twist some arms to modify the noninterference provision for the benefit of all Americans.

How to Develop Plan on Terrorism Risks

Terrorist and other mass violence attacks, which occur with alarming regularity around the world, can threaten your people, operations and assets. Many companies look to insurance — mainly property terrorism and political violence coverage – to help manage the financial impact of these risks, which can include property damage and business interruption losses.

Terrorism Insurance or Political Violence Coverage?

Property terrorism insurance provides coverage for the physical damage and business interruption that can result from acts that are motivated by politics, religion or ideology. Political violence insurance provides coverage related to war, civil war, rebellion, insurrection, coup d’état and other civil disturbances.

Choosing which coverage – or combination – is best for your organization can be tricky. The line between what is considered “terrorism” and what is considered “political violence” is often blurry. For example, should attacks by particular groups be classified as acts of terrorism, or another form of political violence?

To help determine the best insurance program to manage these risks, here are a few things to think about:

  • Ensure the limits of insurance that you buy provide enough protection for multiple loss scenarios.
  • Review the location of your assets to determine the appropriate insurance solution.
  • Understand the policy terms, conditions and limitations of terrorism and political violence insurance.
  • Work with your advisers to understand your property and employee exposures so you can make an informed decision or mitigate potential losses.

Addressing the Risks

Along with insurance considerations, of course, you need to ensure the safety of your employees with integrated and well-practiced crisis and continuity plans in the event of a disaster. Events from terrorist attack to natural catastrophes can cause significant business interruption (BI) losses. Steps to take to manage BI risk include:

  • Develop and test business continuity plans.
  • Conduct scenario testing.
  • Coordinate BI insurance with other coverages, including political violence and terrorism insurance.
  • Be prepared to gather appropriate information in the event of a claim, including recording damage via photographs and video.
  • Maintain separate accounting codes to identify all costs associated with the potential damage.

For more information on these topics, read Marsh’s 2015 Terrorism Risk Insurance Report and our political risk insurance report, Strong Capacity Drives Buyer’s Market for Political Risk Insurance.

2 Heads Are Better Than 1, Right?

Everybody knows that two heads are better than one. We’ve known it since kindergarten, where we were taught that cooperation, collaboration and teamwork are not just socially desirable behaviors-they also help produce better decisions. And while we all know that two or more people working together are more likely to solve a problem or identify an opportunity better than one person doing it alone, it turns out that’s only true sometimes.

Ideally, a group’s collective intelligence, its ability to aggregate and interpret information, has the potential to be greater than the sum of the intelligence of the individual group members. In the 4th century B.C., Aristotle, in Book III of his political philosophy treatise Politics, described it this way: “When there are many who contribute to the process of deliberation, each can bring his share of goodness and moral prudence…Some appreciate one part, some another, and all together appreciate all.”

But that’s not necessarily how it works in all groups, as anyone who has ever served on a committee and witnessed groupthink in action can probably testify.

Groups are as prone to irrational biases as individuals are, and the idea that a group can somehow correct for or cure the individual biases is false, according to Cass Sunstein, Harvard Law School professor and author (with Reid Hastie) of Wiser: Getting Beyond Groupthink to Make Groups Smarter. Interviewed by Sarah Green on the HBR Ideacast in December 2014, Sunstein said that individual biases can lead to mistakes but that “groups are often just as bad as individuals, and sometimes they are even worse.”

Biases can get amplified in groups. According to Sunstein, as group members talk with each other “they make themselves more confident and clear-headed in the biases with which they started.” The result? Groups can quickly get to a place where they have more confidence and conviction about a position than the individuals within the group do. Groups often lock in on that position and resist contrary information or viewpoints.

Researcher Julie A. Minson, co-author (with Jennifer S. Mueller) of The Cost of Collaboration: Why Joint Decision Making Exacerbates Rejection of Outside Information, agrees, suggesting that people who make decisions by working with others are more confident in those decisions and that the process of making a judgment collaboratively rather than individually contributes to “myopic underweighting of external viewpoints.” And even though collaboration can be an expensive, time-consuming process, it is routinely over-utilized in business decision-making simply because many managers believe that if, two heads are better than one, 10 heads must be even better.

Minson disagrees: “Mathematically, you get the biggest bang from the buck going from one decision-maker to two. For each additional person, that benefit drops off in a downward sloping curve.”

Of course, group decision-making isn’t simply a business challenge–our political and judicial systems rely and depend on groups of people such as elected officials and jurors to deliberate and collaborate and make important decisions. Jack Soll and Richard Larrick, in their Scientific American article You Know More than You Think, observed that while crowds are not always wise, they are more likely to be wise when two principles are followed: “The first principle is that groups should be composed of people with knowledge relevant to a topic. The second principle is that the group needs to hold diverse perspectives and bring different knowledge to bear on a topic.”

Cass Sunstein takes it further, saying for a group to operate effectively as a decision-making body (a jury, for instance) it must consist of:

  • A diverse pool of people
  • Who have different life experiences
  • Who are willing to listen to the evidence
  • Who are willing to listen to each other
  • Who act independently
  • Who refuse to be silenced

Does that sound like a typical decision-making group to you? When I heard that description, I immediately thought of Juror 8 (Henry Fonda) in “12 Angry Men”–a principled and courageous character who single-handedly guided his fractious jury to a just verdict. It is much harder for me to imagine our elected officials, or jury pool members, or even the unfortunate folks dragooned into serving on a committee or task force at work, as sharing those same characteristics.

The good news is that two heads are definitely better than one when those heads are equally capable and they communicate freely, at least according to Dr. Bahador Bahrami of the Institute of Cognitive Neuroscience at University College London, author of “Optically Interacting Minds.” He observed: “To come to an optimal joint decision, individuals must share information with each other and, importantly, weigh that information by its reliability.”

Think of your last group decision. Did the group consist of capable, knowledgeable, eager listeners with diverse viewpoints and life experiences, and a shared commitment to evidence-based decision-making and open communication? Probably not, but sub-optimal group behavior and decisions can occur even in the best of groups. In their Harvard Business Review article “Making Dumb Groups Smarter,” Sunstein and Hastie suggest that botched informational signals and reputational pressures are to blame: “Groups err for two main reasons. The first involves informational signals. Naturally enough, people learn from one another; the problem is that groups often go wrong when some members receive incorrect signals from other members. The second involves reputational pressures, which lead people to silence themselves or change their views in order to avoid some penalty-often, merely the disapproval of others. But if those others have special authority or wield power, their disapproval can produce serious personal consequences.”

On the topic of “special authority” interfering with optimal decision-making, I recently heard a clever term used to describe a form of influence that is often at work in a decision making group. The HiPPO (“Highest Paid Person’s Opinion”) effect refers to the unfortunate tendency for lower-paid employees to defer to higher-paid employees in group decision-making situations. Not too surprising, then that the first item on Sunstein and Hastie’s list of things to do to make groups wiser is “Silence the Leader.”

So exactly how do botched informational signals and reputational pressures lead groups into making poor decisions? Sunstein and Hastie again:

  • Groups do not merely fail to correct the errors of their members; they amplify them.
  • Groups fall victim to cascade effects, as group members follow the statements and actions of those who spoke or acted first.
  • They become polarized, taking up positions more extreme than those they held before deliberations.
  • They focus on what everybody knows already-and thus don’t take into account critical information that only one or a few people have.

Next time you are on the verge of convening a roomful of people to make a decision, stop and think about what it takes to position any group to make effective decisions. You might be better off taking Julie Minson’s advice, electing to choose just one other person to partner with you to make the decision instead. Seldom Seen Smith, the river guide character in The Monkey Wrench Game by Edward Abbey, was obviously a skeptic when it came to group decision-making, but he may have been on to something when he declared:

“One man alone can be pretty dumb sometimes, but for real bona fide stupidity, there ain’t nothin’ can beat teamwork.”