In our last article, we discussed gun culture and history, trying to understand how the gun became such a powerful symbol of America. Today, we will look beyond the numbers behind gun violence, to identify specific opportunities to lower gun violence. Rather than going after the most popular symbols of gun violence, we only want to focus on proposals that can measurably lower gun related deaths. Extreme gun rights groups have tried to make changes or expansion in gun control laws difficult or impossible to implement. However, gun owners are just like any other group, with a small core of highly vocal members and a larger number of more moderate members.  Even non-gun owning Americans have a strong respect for gun rights, or at least  concerns over a government that is too strong. Reasonable supporters of both  gun rights and gun control need to get together to jointly form a new view on guns in America. Just as the Republican party is being forced to re-think it’s policies, this is the time for us to rethink how guns fit into America’s culture, and how the tools of Change Management will help us get there.

The strongest gun advocates have often been personally touched by gun violence. Not surprisingly, they are deeply offended by the vitriolic rhetoric, and lack of compassion,  from gun extremists. However, not all gun rights supporters are extremists. The “silent majority” of gun owners are fairly moderate, and becoming more so over the years. Gun owners may have first used a gun in the military. Others started (or continued) their interests in guns in the police force, as prison guards, as sheriffs and deputies or as other public protectors. These men, and they are almost entirely men, believe they need guns to protect their family. For many gun rights advocates, the role of the “protector” is part of their personality. The vast majority of gun owners could not imagine going on  a killing spree, or hurting children with weapons, and believe that as gun owners they play a role in preventing this from happening. When killers are found, gun owners advocate the most severe and immediate punishment. When gun owners are in any way associated with killer who use guns, they are deeply offended and want to strike back at gun-control advocates and the media. They feel that the media and gun control groups paint them as friends of the villains, merely because they want to continue to protect their families.  

We each need to understand the other side’s motivations. And we need common ground.  If we seek common ground, we will find unexpected allies. For example, a survey from Pew Research shows that households without guns are more supportive of gun controls than households with guns. Which isn’t surprising. If we look a little closer, we see that individual members of households with guns, have different opinions. The gun owner has the strongest gun rights opinions, but other members of the household have more moderate opinions. Asked if gun control will lead to the government taking away guns: gun owners strongly believe this (51%), non-gun owing households believe it less (45%) and other members of a gun-owning household believe it least of all (41%). The best allies for gun control may well be the other members of the gun-owning household! The public discussion is filled with partial facts, fear, and policy proposals that lack specific, measurable goals. We need to be guided (not ruled, but guided) by real data, and we need to understand why gun control is so strongly opposed.

GOALS: It’s time to focus on specific and measurable changes. To do that, we need facts about gun violence today and goals for reducing gun violence tomorrow.

• Guns: There are 300,000,000 guns (100,000,000 are handguns) in America. Gallop research tells us that more than 40% of households own one or more guns, and the gun owner is predominantly a man. Rural areas have high gun ownership than cities. With 80% of Americans living in cities, gun ownership seems to be dropping. Crime in America has dropped by more than 50% since the 1990s (major crimes are down as much as 95% in New York City), but “protection of the home” is still the most frequently cited reason for owning a gun. Despite lower crime, gun owners have been on a buying spree for years.

Assault rifles have are often part of the debate on gun violence, but rifles are rarely a cause of death in America. The notorious AR-15 has been used in Columbine style mass killings, but in 2012, only 323 people were killed by a rifle of any kind, compared to 6,220 killed by handguns. Handguns are 60 times more likely to be used in a homicide than a rifle (including every AR-15). There are good reasons to ban assault weapons, but is this a top priority? With so many guns in circulation, and no gun-control  proposals to take away existing weapons, merely banning future weapon sales will take decades to have any impact on the current level of violence.    

Handguns role in gun violence deserves a closer look. They are more portable, and can be taken to more locations than rifles. By being more available, handguns are available when tempers flare and when violence erupts. Handguns are like lighter fluid. They don’t start the fire, but they make it easier for the fire to start, and they make the fire burn hotter. Because handguns are so portable, they seem to spend more time “at hand” rather than locked away. Portability makes the very weapon that is supposed to protect you and your family, your greatest threat. All guns, but especially handguns, INCREASE the chance that you will kill a member of your own family. As we can see in the next section.

• Gun Storage: One of the most useful services that the NRA offers, is safety training. The NRA advises gun owners to always lock up ammunition and guns, and to not load a gun until it is ready to be used. Failing to follow these rules leads to death and murder. Consider the “blade runner,” Oscar Pistorius. It happened in South Africa, but the story is universal. Oscar was afraid of being assaulted or kidnapped, and kept his guns loaded, a machine gun in his bedroom, and a handgun by his bed. He woke up “sensing” there was an intruder in his house. In the dark, he investigates and shoots an “intruder,” who he finds is actually his girlfriend. If there was more time between waking and shooting, he might have acted differently. Yet in story after story, the shooter believes that quick access to a gun is imperative, and outweighs the dangers of using loaded weapons in the dark or making life-and-death  decision when you’re not fully awake. Also consider the much less publicized case of Rondell Smith, who bought a gun after an attempted break-in at home. No one was hurt in the break in, but two weeks after he bought a gun, his two-year-old  son shot himself and died.

If all guns in America were safely stored and locked, according to NRA training, gun violence would be dramatically reduced. Small children would not kill themselves. Older children, perhaps those who were given a gun but are too young to use it unsupervised, might still be alive. Even the growing number of teens who use a parent’s gun to commit suicide, might be alive. In 2010, 6,740 young adults were killed because they got access to a gun or were killed by a member of the family. A significant number of these deaths would not have happened if the owners of these guns, kept them unloaded, and locked away.

• Bullets: In 2010, US citizens bought more than 12 billion bullets, up from the “normal” 9-10 billion, to stockpile ammunition in case gun-control laws are passed. The global production of bullets is estimated at 9 billion bullets annually; the growth in sales has depleted world supplies of ammunition. What is America doing with all this ammunition? America has one million police, sheriffs, deputies, prison guards and other government security officials. There are another million private security guards. Let’s assume that every security worker needs 1,000 bullets per year (2 billion total) for practice. Another 2 billion bullets went into stockpiles. There are also one million Native American’s living in or around reservations, who participate in some traditional hunting. Let’s give each of them 1,000 bullets per year. That leaves 7,000,000,000 bullets. The  number of bullets used to shoot human being is minuscule, around 250,000 annually. Too few to count in an ocean of ammunition.

That means that the vast majority of bullets are used for, recreation: hunting, target practice, shooting competitions, historical recreations, demonstrations, etc. Gun owners may earnestly buy a gun for protection, but the overwhelming USE (i.e. actually firing the gun) is recreation. There’s nothing wrong with recreation, but the argument changes when we’re weighing the lives of American’s against constitution rights or against entertainment alternatives. It’s also important because different types of ammunition are used for different purposes. Hunters use hollow-point bullets because they do far more damage, quickly killing the animal. However, hollow bullets are considered “inhumane” under the Hague Conventions, and banned in war. Outside of hunting, gun enthusiasts extol the hollow-point for its “stopping power” when used for self-defense. The types of bullets we use, are a major factor in gun injuries becoming gun deaths. We need to reduce the number of bullets in circulation, and we also need to decide we should allow “recreational” ammunition should be used against human beings.

• Homicide: The gun discussion is focused on homicide, specifically killing sprees… in schools, shopping malls, and public places. These events are horrifying, but are they common? 2012, 29 students were shot at Harper High School in Chicago individual gun shootings, and eight died. This was not a spree. It was a series of individual killings over the course of a year, and these individual deaths were largely ignored by the media. Six times as many children died in in the last 100 days, as died at Sandy Hook. Since 1982 there have been 62 mass killings, claiming just over 500 lives. Compared to the 300,000 gun-related homicides and 3,000,000 gun shootings during this time, mass killings are lost in the numbers. Every year there are 9,000 gun-related homicides. Every year 1,500 to 2,000 American women killed by domestic violence. Every year,  500 to 1,000 Americans… more than 20 years of killing sprees… die in “unintentional” shootings.

• Suicide: More American gun-related deaths are from suicide than homicide, but suicide has largely been ignored in the current discussion. Of 35,000 suicides annually, 20,000 are by firearms. Men predominantly use guns to commit suicide, and are far more successful than women in killing themselves. Suicide is normally practiced by the very old, but in America suicides by 75 to 84 year olds has dropped from 31.1 (for every 100,000) in 1950, to just 15.7 in 2010. At the same time, suicide rates for teens and young Americans have doubled or tripled. Life has improved for the elderly, reducing the attraction of suicide. But why is being young so terrible that so many want to end their lives? And the lives of others?

Spree killings might be better described as elaborate suicides. The postal worker who kills co-workers and then himself. The boyfriend or husband who kills his partner (it is almost always the man who does the killing) and then commits suicide, perhaps also killing parents, children, relatives or friends. Deaths at multiple locations may not be immediately connected, and these events may not be identified as spree killings. Consistent background checks could keep weapons out of the hands of mentally disturbed individuals, reduce homicides and suicides. A gun purchase can last a lifetime, but we may not be mentally healthy for all of our lives. A moment of depression, the loss of a loved one, a divorce, or even a bad mix of medications can lead to suicide, homicide or another Sandy Hook.  We may be mentally healthy when we buy a gun, but what about our mental health over the coming years or decades? In order to drive a car you need to periodically renew your license, have your eyes checked, prove you can still drive a car. Gun-related  killings are now outpacing driving related deaths. Shouldn’t gun owners be as capable of operating a gun as they are of operating a car?

• Gun Injuries: The numbers that we have talked about so far are stunning, but they are only part of the picture. In addition to the more than 30,000 Americans killed by guns, another 75,000 are injured, but survive. A small “improvement” in gun design or the lethality of ammunition, and thousands of injuries turn into deaths.  Alternatively, some of these injuries are failed suicides, accidents due to poor gun management, and domestic violence. These injuries may be the last clue we have about a pending homicide or suicide. Under pressure from the NRA and gun rights lobbyists, funding for research on how to identify and prevent future gun killings has been blocked. If we start funding this research again, we may be able to  save the lives of thousands of Americans.

The numbers are staggering… 100,000 American’s shot every year, and 30,000 killed. Now that we know these numbers, and we more about what they mean, we will develop recommendations to address gun violence. In a period of massive change, most of us lack the basic change management skills the 21^st century demands. By using the process in this series… learning the history of the issue, understanding stakeholder motivation, analyzing the hard data, and developing measurable goals… we can address some of the most intractable problems in our country, and in our corporations.

We live in a time of unprecedented change. The balance of world power has changed, shifting from a singular superpower to a group of rising economies, with China in the lead.  Domestic demographics are changing, with political power rapidly abandoning the traditional older, white, male power center. The Republican party must change, either adopting new values that alienate its aging leadership and many of its members, or abandoning all hope of winning national elections by maintaining the policies they adopted in the mid-20^th century. Weaker countries seeking global power, such as South Korea, are learning how to use cyber war and other asymmetrical warfare tactics to counter America’s massive conventional military advantage. One of America’s most immediate and tragic changes is the increase in gun violence. While this issue has received immense attention in the media, few policy makers grasp why we have gun violence, and offer few effective proposals.  If America wants to stop gun violence in America, we need to introduce real change management, not just a few ineffective laws.

There is an old Russian saying, “If all you have is a hammer, you treat the world like a nail.” Politicians see problems  in terms of laws, rather than long-term programs. Reducing gun-related  deaths in America will require new laws, but it requires much more, starting with an understanding of the effectiveness of existing laws.  We need better collection and research of gun violence statistics. We need real, measurable goals and a process to track the results of the actions we take. American citizens own an estimated 300,000,000 guns, and since 2010 have bought 12,000,000,000 or more bullets annually. Significantly reducing violence will take decades, and requires supporters who will maintain their support for decades. Programs that don’t work must be defunded, and effective programs must be replicated. We need the freedom to experiment, without every effort by gun-control advocates being opposed by the most vocal gun rights advocates. It requires both sides of the argument to agree on the most reasonable way to preserve the rights of gun owners and save the lives of Americans.

A top-down  solution, a comprehensive national gun control law, will fail. There is not enough political consensus to pass and maintain such a law. Even if it could pass, the proposed bills have yet to focus on real, measurable changes. In order to work, we must turn to the discipline of change management. The five key elements of change management that need to be a part of any plan to reduce gun violence are:

• History: Understand why America developed it’s unique relationship with guns.
• Diagnosis: How does America’s gun culture create gun violence?
• Goals: Specifically, what do we hope to accomplish?
• Initiatives: Which changes need to happen, and how do we track progress?
• Measurement: Did we create the meaningful changes that lowered violence?

Let’s dive right in and start with…

HISTORY OF THE AMERICAN GUN: America was created by European settlers who needed to control natives, and later slaves. Early settlers wrote of their fears that natives would rise up and kill us. Gun ownership became not just a right, but an obligation to your families and your community to defend the lives of settlers. Had America been settled by Europe a few hundred years earlier, perhaps we would be talking about the sword rather than the gun. But it was the gun that defined America when hunting provided the meat needed to feed your family.  Americans predominantly fought honor duels with guns, killing other citizens who dishonored their good name. Most importantly, it was the citizen with a gun that allowed America to fight the British in the 13 colonies, fight Indian wars throughout America, and eventually fight other Americans in the Civil war. When America became a nation, it was a small country with powerful enemies in Europe, and with competing European controlled governments to the north and south. At a time when only the mightiest of nations could afford a standing army of any size, America chose to rely on a militia for defense. Which bring us to…

• The 2^ND amendment: Strong gun rights advocates point to the 2^nd Amendment their primary justification for unrestricted gun ownership, going so far as saying that the founding fathers wanted to arm so that we could overthrow the government, if it overstepped its authority. The 2^nd Amendment states, “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.” Guns advocates fixate on,  “shall not be infringed,” while having ignoring, “A well regulated militia.” No other amendment uses the word “regulated”, to say nothing of “well regulated.” The 2^nd amendment, plus the “Mlitia Acts” that followed a few months later, defined how our national defense operates, and did not say anything about other gun rights. In fact, the Supreme Court repeatedly found (in: United States v. Cruikshank, 1875; United States v. Miller, 1939;  District of Columbia v. Heller, 2008; McDonald v. Chicago, 2010) that the 2^nd amendment is about maintaining a militia, not personal defense.

• Militias: The Bill of Right became law in 1791. In 1792, the Militia Acts were passed, defining a militia (as a semi-professional military, controlled by the state, and called up at the request of the President). Every white adult male was to serve, and each state was responsible for training and inspecting their troops twice a year. The Militia Acts stated that the militia was to protect us from any, “foreign nation or Indian tribe,” and lays out required equipment: a musket with 24 bullets and 1/4 pound of gunpowder, a knapsack, etc. In 1903 a subsequent Militia Act abolished all state militias, replacing them with the National Guard. The second amendment was never repealed, but it should be clear that a National Guard, plus the development of a standing military (now the largest in the world), eliminated the primary reason for this amendment.

• Rebellion Against Tyrants: The need for unlimited gun rights are often justified because citizens need to follow the plan of the founding fathers, and be ready to overthrow the government, should it overstep its authority. The recent debate between Alex Jones and Piers Morgan repeatedly references this old argument. If Jones appears disturbingly agitated, he also appears to be genuine in his conviction. As do other gun rights advocates who see themselves as protectors of the Republic. This has become a pillar of belief for gun advocates; unfortunately, it is not true. In 1792, citizens in Pennsylvania refused to pay a tax on whiskey. Citing the Boston Tea Party (making them the first and original Tea Party), they claimed the right to armed rebellion against the government. By 1794, the Whiskey Rebellion escalated to 500 men laying siege to a tax collector’s home. How did the founding fathers react? President George Washington called out the state militias, raised an army of 14,000 soldiers and put down the rebellion by force. The next significant rebellion (including a lot of talk about tyranny) turned into the Civil War. It ended badly for the rebels. Native Americans also had “armed rebellions,” which ended very badly. From the founding fathers to today, America has been very consistent, and very efficient, in dealing with armed rebels.

• Gun Control Laws: Gun advocates argue that the 2^nd amendment comprehensively protects their right to any number type or number of guns, with any legislative restraint. This is the exact opposite of US legal history. Citizens who once dueled on city streets, were pushed to the outskirts of town and by the 1880s (through a series of state laws) were forbidden to duel. Likewise, states known for strong gun support today, once passed laws to take guns away from citizens. At least, from black citizens. These laws, were still in effect until the early 20^th century, explicitly or implicitly using race to determine gun ownership. Later, the rise of organized crime (and the Tommy Gun) led to the National Firearms Act of 1934, which limited sales of military-style  weapons, high-capacity  magazines, and silencers (collectively called “weapon of assassination”).

Gun Culture: The founding fathers wrote the 2^nd Amendment for very specific reasons, with national defense as the main reason. The time of militias has long since passed. The history of gun restrictions is long, and a few more regulations won’t change it much. And yet, it doesn’t really matter. While both sides are arguing law, this is about culture. Gun-control advocates are trying to change American culture, and gun rights advocates are trying to preserve a culture that no longer exists. If it ever existed at all.  At a time of culture wars, primary roles have changed. Liberal Democrats back their proposals with hard statistics and research on violence. Behind the bluster, the normally undemonstrative Republicans, are making an emotional appeal that we leave them their role as protectors of their own home. Tales of the Alamo, images of the Old West and the homesteader firmly planted in from of a log cabin with gun in hand, ready to protect the family, are vital images of American history, but they are not very relevant in a country where 80% of the citizens live in cities, and rural life is disappearing.

We need to balance the importance of our culture and history against the need to protect American citizens. History needs to be part of the equation, but prejudices and preconceptions about guns need to be forgotten. We need to be guided, but not ruled, by the facts. We need a bottom-up approach that provides specific programs with specific actionable results that save the lives of Americans. The programs that both gun owners and gun-control advocates can agree are effective, without changing the world of the gun owner.  That’s quite a goal.  That’s why we will only succeed if we follow a formal change management process.

Now that we have some understanding of gun history and culture, the next part of this series will dig into the research and identify targeted programs to reduce violence in America.

The Bloomberg administration has announced that the City of New York will now fight Civil Rights lawsuits, instead of offering small settlements. Deciding to fight more cases as a cost-control mechanism creates a tipping point for lawsuits, and document reviews. For too long, linear document review has been the “gold standard,” in eDiscovery. However, studies have shown that linear review is very inaccurate and it costs far more than alternatives. Alternatives like Technology Assisted Reviews (TAR), that are 70 to 90% lower in cost. It’s going to something big to move conservative lawyers from the linear reviews they are familiar with, to TAR. Something like New York City deciding to increase the number of lawsuits it handles.

It’s no coincidence that the City is announcing their new strategy just as the sequester kicks in. Cities and states are scrambling to close budget gaps in 2013. By moving away from the old policy of settling minor cases, the City hopes to make a dent in the cost of litigation. This policy has in pilot since mid-2011, but has only been used for 50 of the 1,500 Civil Rights suits the City deals with every year. So far, the City has only targeted the cases they feel are the weakest, but they have won more than 75% of time, when the cases get to court. And the number of new suits has dropped for the first time in years.

This new policy is incredibly important because it has the potential to be the tipping point for quickly moving us to more TAR based reviews, and more outsourcing in Discovery. Here are the key issues:

LOWER COST: Currently only 50 out of 1,500 cases have been targeted, as easy cases to win that make financial sense to fight. Initially, you tend to be conservative when you move to a new policy. Maybe the number going forward will be 100. But if you changed the cost of litigation, then you can greatly increase the number of cases that you can pursue. Big corporations pay around $2,000,000 just in eDiscovery costs, per case. How much does the City pay? If the cost of eDiscovery dropped dramatically, how many more cases would be with fighting? Using TAR and outsourcing together, could completely change the equation with hundreds of fewer settlements.

REDUCTION IN CASES: The number of new cases is declining. The decline is small, but it is real. If NYC is more aggressive in fighting suits, the number of new suits may continue to decline. Avoiding new suits is even more cost-effective than winning in court.

LEGAL FEES: The NYTimes article gave the example of one case where the City fought and lost in court. The plaintiff won $600, but the city also had to pay the plaintiff’s legal fees of $78,000. In the few cases the city fought and lost, some had legal fees in the hundreds of thousands of dollars.

MORE MUNICIPALITIES: NYC may have some financial gaps, but other municipalities, especially in California, are in bankruptcy. The City of Detroit is about to have a manager appointed by the Governor of the State. Most cities, and corporations for that matter, have some sort of formula as to when they pay rather than ligate. Change the cost of litigation, and you dramatically change that formula. Cities that are in bankruptcy may be ordered by the bankruptcy trustee, to move to more cost effective legal processes, to protect the remaining assets of the city.

Not that long ago, it was the demand from Freedom of Information request that forced City and State governments to move from manual document redaction to automated redaction. The financial squeeze from a still recovering economy and the sequester from Washington are forcing the courts to get creative. It seems likely that NYC or some other municipality will be squeezed hard enough to make a big move towards TAR and greater legal outsourcing. Will New York City kill linear document review? The jury is still out, but I’m betting that TAR is about to get a big boost from the Big Apple!

Over the past few years, outsourcing has become more sophisticated. Outsourcing firms have learned that economies rise and fall, and that different currencies can have very different exchange rates over time. Contracts now include many more clauses and conditions than they used to, so it’s a bit more difficult to compare a flat rate per hour. Still, there are definitely trends. Since India is still the world’s brand for outsourcing,
let’s start there and look just a bit deeper than just the hourly rate:

• India: India still offers positions at a fraction of the hourly US rates. Due to the
  downturn in the world economy, outsourcers have held back raising rates, even
  though inflation in India is two to three times greater than the US. Whether or not they will catch up for these “missing years,” we can expect Indian inflation to outpace the US for the foreseeable future. India also has a higher rate of promotions (on top of cost of living increases), and a very high attrition, leading to a
  higher cost of recruiting, training and employee incentives. While it is not
  unique to India, anytime you deal with another country you need to keep in mind
  that currency rates may change dramatically. If you sign a contract today under a favorable rate of exchange, by the time of your contract renew the exchange
  rate could be dramatically different. This is applies to any offshore location.
  Finally, India does not have a well-established “night shift” culture, and it
  takes dramatic incentives to get people to work at night for any prolonged
  period. Since “normal” work hours in the US are late night in India, your best
  bet is to outsource over-night work, or on work that can be returned a day or
  two later.
• Other Countries: There are many countries with very specific value propositions:
  specific areas of expertise, better synchronized work hours, different language
  skills, and so on. Let’s use the Philippines as an example. While India’s
  culture is based on British culture, the Philippines follows American culture.
  Britain’s long history with India reduces many cultural barriers, especially
  since India follows British law (the Philippines follows American law). For an
  American, they will find it a bit easier to use the Philippines for tasks
  involving language and will require much less training for legal outsourcing.
  Their inflation rate is on par with the US, and attrition is also lower. There
  are similar (but not a severe) night shift issues, and you have the same
  currency exchange rate issues. However, comparable work in the Philippines
  costs about 20% more, and not all the established forms of outsourcing are
  available in the Philippines.
• U.S. Outsourcing locations: These are smaller cities and towns with lower wages and operating costs than the big metropolitan cities where many outsourcing
  projects originate. Pricing here is a very mixed bag. It depends on the local
  conditions. If we look at Fargo North Dakota, which has a long tradition in
  outsourcing. In 2010, local unemployment was 5.0% and dropped to 4.2% by August
  of 2011. A busy local economy increases pressure for higher wages and raises
  your hourly rates. With greater cultural similarity, much less soft skill
  training is needed. Inflation is at US levels, there are no currency exchange
  risks and hours of work fit well with the rest of the US. Since Fargo’s greater
  metropolitan population is about 150,000 compared to Mumbai’s 20,000,000, it
  often takes longer to recruit there. And the costs are much higher than India,
  usually 50% more. You can still save money and improve services, but the
  financial impact is much less.
• US Major Cities: Why outsource to the same location (with the same basic costs) that you work in? You may need a skill that is only available in your local market,
  or the work process may require direct physical interaction. You may even host
  the outsourcer within your facility. However, even in the same location
  outsourcers may provide nuanced cost advantages: a document outsourcer lease a
  fleet of copiers at a better rate; outsourcing e-discovery proves staff that is
  more fully billable than internal resources; outsourcing of programming
  minimizes the number of programming skill you would need to hire and keep
  occupied. A good outsourcer may have slightly lower attrition and costs, but
  otherwise they hire and buy from the same market as you do. This is the highest
  cost market, but there are times when it can still the best deal.

There are many other details that will affect the real value
of your outsourcing price. India continues to be one of the lowest per hour
options. Even though costs and risks for India are often left out of the
initial pricing, there are still opportunities to reduce costs and improve
work. There are a lot of other countries that offer equally compelling options,
but you need to know these markets to understand their real value. Outsourcing
to smaller domestic locations is a very viable option, and there are still very
many “undiscovered” locations that offer excellent value. Even local
outsourcing in the big cities still has a place, and offers value, but should
be used more selectively. Invest a little time to understand how to interpret
the cost and value structures of each location, and it will pay a big
dividend!

What do Republicans believe in? The Republican party is America’s conservative party. Conservatives, by definition, are resistant to change. Conservative parties, around the world, are organizations that: look back on former glories, believes the past was better and safer than the present, knows that changes in demographics and moral values have made the world unfamiliar and uncomfortable, and fight to build a more predictable world… for us and for our children.

Democrats, on the other hand, represent the liberal view-point. Liberals are less tied to the past, and often seek to improve the world by overturning outdated values from the past. By definition, liberals are more open to change, and are willing to accept that there could be a multiplicity of legitimate solutions for a problem.

By contrast, conservatives demand more concessions than they will give, making them reluctant to make deals that are “change makers.” If you go to TED Talks, a collection of short presentations by some of the most intelligent people on earth, you can watch a presentation by Jonathan Haidt about the moral roots of conservative and liberal thinking. Haidt’s studies show that there are five universal values (not doing harm, being fair, group loyalty, respect for authority, and purity) that determine our moral programming. Hadit’s data also shows that conservatives require agreement across  all five values, while liberals are inclined to make a deal with agreement on as few as three values. Liberals are more likely to make a deal. Conservatives are not only less likely to make a deal, but also more likely to look despairingly on  fellow conservatives who compromise their values for the sake of making a deal.

The problem facing Republicans is that their current view of world formed,and then soon froze into place, during the “Golden Age of Conservatives”, the Presidency of Ronald Reagan. But in the decades since the 80s America has drastically changed: demographics have changed, women have become the dominant voting bloc, the cold war ended a generation ago, and even the weather has changed. Republicans are torn between staying “on topic” with an increasingly irrelevant agenda and developing a new agenda that is relevant to most Americans, but not to all Republicans. If the Republican party is to remain a national party, they need to change their position and their message!

As a political scientist, I understand that a change in message means a change in identity. There is a risk that the most conservative elements of their party may reject change. But as a project manager, I know that a group that cannot prioritize their needs, cannot hope to achieve their agenda. Corporate project managers face the same issues when managing major change projects. Senior corporate managers are usually older and more conservative, and they are the ones who… more than anyone else… are responsible for protecting the firm from risk. Learning how corporations and project managers deal with change, just might tell us how to save the Republican party!

In the past, senior managers in major corporations made emotional decisions that would never be allowed in today’s transparent, stockholder driven culture. In the mid-80s, J.C. Penney’s CEO decided to move the corporate headquarters from New York City to Plano Texas. The entire executive team, hundreds of executives, resigned. With a population of 100,000, Plano’s labor market could not easily replace these executives, and Penney’s stock lost 50% of its value. Why would the CEO pursue this risk strategy? The depressed Plano real estate market was depressed and cheap, and there were tax incentives, but that was available everywhere (including NYC). The key factor on Plano’s favor appears to be that the CEO was born just over the border in Oklahoma.

Despite the negative results and the lack of analysis to support his decision, the CEO kept his job. In the 80s, CEO preferences … rather than research… was good enough for key decisions. Today, major corporate (and government) decisions require data and analysis. Let’s look at some key issues for the Republican Party, why these are the key issues and how they need to change:

GUN VIOLENCE: Republicans often say the 2nd Amendment provides unconditional support for guns, which is not true.  The 2^nd amendment… “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms”… ties gun ownership to the security of the state, not just the individual. This was further clarified in the Militia Acts of 1792, stating the responsibility of adult males to carry a gun and be called up by the state in time of national emergency. The Militia act of 1862 allowed African-Americans to serve in Militias, and the Militia act of 1903 replaced all militias with the National Guard. Yet, the most vocal supporters of gun rights do not appear to realize that these events occurred.

Of course, in Revolutionary America, there were other reasons than traditional national defense for keeping Americans armed. Americans lived in a wilderness filled with dangerous animals; firearms provided defense and fresh meat for our families. The  westward expansion started scores of Indian wars as American’s took over more and more land, until the wars ended at Wounded Knee in 1890. Adult white males needed public duels to settle personal disputes, until the last states outlawed dueling in the late 1800s. And, of course, men had a moral obligation to protect family and neighbors in a slave uprising.

While the reasons for the 2nd Amendment have all but disappeared, Republican’s believe that we cannot update the definition of gun rights. Yet, American did this in 1934, when high-capacity, fast-firing military weapons entered the American culture. Today we speak about assault weapons and high-capacity clips, in the 30′s it was machine guns (such as the infamous “Tommy Gun” from the Chicago mob wars), high-capacity drum magazines, and silencers. The National Firearms Control Act of 1934 required the registration and taxing of any sales of restricted weapons and paraphernalia. The Firearms act imposed a $200 fee for any of these purchases. If the Firearms Act had indexed the fee to inflation, it would be $3,500 today. However, since the 70s a combination of legislative changes and “tweaks” to gun design have allowed the unrestricted sale of weapons that are more powerful and accurate than the Tommy Gun.

For most Americans, supporting the right to buy a 21st century assault weapon because an 18th century land-owning white male living in the countryside needed a gun, is quite a stretch of logic. Until recently, only 1% or 2% of the population would support this argument, and if you threw in controls on hunting rifles, you might get up to 5%. The more that we allow the free sale of thee weapons, the more frequently we see incidents of public massacre, which is exactly what the specifications of these weapons claim to deliver. When weapons were less deadly, and the need for guns more obvious, there was little will to ban them. Guns owners may still have the political unity to fight off gun restrictions, in 2013. But as new massacres continue to fill the news, the Republican part needs to decide if it wants to be the party of unrestricted gun rights. It can, and some of the membership may even believe it should. Just as corporations must decide which new markets and technologies to adopt, the Republican party needs to decide if investing in this policy leaves it with political capital for any other changes.

SCIENCE: In the early and mid-20^th century, a master of oration could talk a bill through Congress. Today, everyone wants facts. We want to see the numbers. We want the credentials of the number crunchers. And we want to know… the science. The 21^st century is a very precise world. When someone is arrested, we expect videos and DNA evidence. When a storm is on the way, we what to know when it will arrive, and how long it will last. Technology provides the precision that American farmers need to maximize crop production, and that each of us depends on every day.  It correctly predicted that Hurricane Sandy would be the most destructive storm in East Coast history. However, when that same science predicts that record-breaking storms will continue, Republicans attacked the science and the scientists making these predictions.

For the last 30 years, Republicans have supported policy positions that lack empirical evidence. Agricultural, industrial and economic policy in the early 20th century had to be based on opinion, because the science did not exist. We now understand how weather works, the scientific universally accepts the new weather model, and we can use that model to make accurate long-term weather predictions. Senior corporate managers can no longer simply follow their personal preferences. Likewise, Republicans must decide between fact-based  policies that may appeal to a larger audience, and policies that are followed because of tradition or custom. As America become ever more diverse, fewer policies can be based on just shared history and culture.

Still, every policy cannot be supported by numbers. In banking, the pursuit of short-term profitability conflicts with following the best interests of clients. Yet, firms that pursued “profit-first” and ignored customer interests are paying a high price. Banks that supported the “moral” view of customer service may be the big winners, as banks that. Accepting science does not mean rejecting personal values, but when the science shows us how the universe works, we need to accept this and develop new policies, rather than attacking the science. If the Republican party cannot do this, then, just like a corporate executive who cannot explain why he is supporting an unprofitable division, the Republicans are going to lose the support of their “shareholders.”

FAMILY VALUES: This is the area where the Republican self-proclaimed role as the party of morality, can be given free rein. The problem is that the party’s positions are not only different from mainstream America, they are different from the Republican membership. Gay rights issues have become the lightning rod for cultural change in America. In the last century, most Republicans thought that being gay was bad. Accepting that your child was gay was bad. And gay marriage was unacceptable. But it’s been a decade since Richard Cheney, the very Republican 46^th Vice-President of the United States, told the world that his daughter was gay. He publicly stated that he saw no issue with this daughter being gay, he accepted his daughter Mary and her partner were full members of his family, said that he Mary’s child was like any of his other grandchild, and loved Mary just like any other child. Oh… and gay marriage was unacceptable. Richard Cheney IS the typical older Republican, who speaks public Republican policy while following the real-world values that their families actually lived. The difficult to understand, and support, chasm between personal and public values has become the Republicans dilemma.

Talking one way and living another is not unique to Republicans. The Democrats struggle with their own dichotomy between values that they support, such as unionization… especially the various teachers unions… and the values of mainstream America, which is decidedly anti-union. Corporations are struggling with issues of cultural diversity in the workplace, Women as CEOs and as the majority of the new workforce, and global integration of operations. The big lesson is not how we will solve any single issue, it is that we need to continually deal with change. They process of accepting change, and integrating it into corporate and governmental culture is an ongoing process, not a single issue or project. Change management is needed to continuously incorporate new culture, technology,  ideas and practices. To be conservative means holding on to the past, but the present is becoming the past faster than ever before. Republicans are used to establishing policies that are meant to stand for generations, but most of today’s policies are out of date in just a few years.  Change management is the greatest challenge for the Republican party.

Will the Republican party survive the 21^st century? If they want to they can, but they cannot survive the 21^st century as the Republican part of the 20^th century. Corporations have faced similar challenges in transitioning to the 21^st century. That transition has included building Project Management Offices, Change Management groups and Process Improvement organizations.   Projects and changes are no longer “occasional events,” they are vital ongoing activities of every organization. The leading corporations around the world have sizable and effective organizations to incorporate change, and the speed of change… in virtually every endeavor… is increasing. The Republican party needs to do more than just change their policy positions; they need to change their process for change. The models are out there, in the most respected and profitable corporation in the world. If they want to change the Republicans can, but what kind of party do they want to be? Time, and the 2016 election will tell!

If you could place the Republican problem on a map, it would be the tiny spec labeled “compromise” that sits just outside the vast territory called “change.” Enormous change is happening, but the Republican party is not having any of it! But you really can’t blame them. They are the official conservative party, and being conservative means being the party that looked back on the past as something better, and resists anything new. As we saw in the Presidential debate, the Republican candidate (Mitt Romney) questioned the size of the US Navy, which he said has not been this small since 1917. Which was technically true if you counted the number of ships. The Democratic candidate (Barack Obama) responded that you cannot compare 1917 ships to 2012 ships… and also commented that Romney could just as well have mentioned the lack of horses and bayonets in today’s military.

These debates will never be accused of providing too much information, but consider this. The destroyer is one of the smallest sea worthy gun ships in the navy, and the battleship used to be the largest. In WWII, a battleship was typically 15-30 times larger than a destroyer. A 1917 “big” battleship is about 10,000 tons. A “little” destroyer built in 2012 is 14,000 tons. We can’t compare the size of  battleships, because not a sinle navy in the world still uses battleships. The last battleship in the world was retired 20 years ago. On average, each class of ship today is 10 times the size of their 1917 counterpart. And today’s ships have more: accurate guns,. more powerful shells, radar, sonar, GPS, missiles (increasing “gunnery range” from 5  miles to several thousand miles), satellite support, computers, diesel or nuclear power (1917 was steam powered),  and electricity (in 1917 many ships lacked electric lights). Was Romney’s comment on naval power a slip? Probably not. Most likely it reflected how strongly the Republicans are focused an emotional view of the world, rather than a  fact-based view.

You’ve probably seen something similar at work. Groups that just can’t acknowledge that something about the business model, or the culture of the firm, has changed. They feel that proposed changes are a terrible mistake, and any resistance on their part is right-minded resistance. They feel they are the last line of resistance. Besides, if they can hold out, you and your projects just might go away. It almost sounds like a definition of the Tea Party. Because these parallels are so strong, if we can find the key to revitalizing the Republican party, we might also learn how to solve some of our own corporate problems.  Besides, if the pace of change is indeed increasing, we need to know how to deal more effectively with change.

LEADER: Every major change starts with a leader who leads the change. When the Republicans nominate a Presidential candidate, they choose the face of the party for the next four years. Romney had government experience, but not at the national level.  He had powerful connections and is a wealthy businessman, which is very much in line with the Republican image of success. However, few presidential candidates have made their money in the world of finance, but at a time when America is still recovering from a global financial collapse, Romney had special vulnerabilities. He most conservative Republicans believe that their message was right, but the messenger was wrong. Undoubtedly, we will learn more about what happened in backroom discussions within the Republican party, but it does appear that Romney wanted to present a more centrist view, especially in immigration reform. A different leader might have gained more votes, but they would need a different message to gain more than the core Republican vote.

When a corporation is faced with a major change, internal politics are very, very real. The choice of the leader of change is very important. In IT, where change happens more rapidly than in other departments, the turnover in CIOs is very rapid. You can interpret the data different ways, but a CIO generally gets “voted out” every two to four years. For the leaders below the CIO, their perceived “time in power” can be even shorter. IT staff is always very interested in who is leading  new initiative and which groups will benefit. It is often assumed that when a UNIX professional leads, UNIX groups will prosper. Likewise, if the new leader comes from a PC background, it is assumed that PC desktop and server groups will prosper once changes take place. Choose and announce your leaders carefully. Don’t assume that your workers are passive, and will automatically follow any new direction that management agrees to.

MESSAGE: Once the primaries are over, the winner is expected to reach out to their party and perhaps beyond their party to form their platform. The platform used to be very important, with most of the news coverage focused on an analysis of the “message” in the platform. In the 2012 election, the platform virtually disappeared for both the Republicans and the Democrats. Instead, the debate was about the other guy’s flaws and failures. Very little airtime was spent by Republicans talking about the Republican platform. Even the details of the proposed Republican budget were not for public discussion, and would only be fully released after the election was won. As the Republican party became ever more conservative, there seemed to be no happy medium between the desires of the ultra-conservatives and a more liberal message that would appeal to undecided voters.  The decision to have no message in many issues areas appears to be the worst possible decision, if votes are the measure of success. There are difficult decisions that still need to be made, but few in the party who wanted to be associated with the downside of these messages. During the election, it was repeatedly stated that program cuts could be delivered with virtually no negative consequences to the elderly or the needy. However, in the budget discussions after the elections, these easy steps for balancing the budget seem to have disappeared. The lesson learned is that you can’t escape bad news; eventually, you have to reveal the big plan.

With any big change there will be good and bad news. You can’t hide from it. When change comes to your organization, change is easier if everyone can rely on what they are told. When everyone second guesses the truth of your message, or wonders why there isn’t more information, resistance to change rises. If your organization plans to dramatically reduce the cost or the size of a department, positions may need to be cut or job may be moved to a new location. Corporate culture differs dramatically, but providing as much information as honestly as possible is the best policy. If the entire plan is not yet fully known, that’s fine. But as the plan progresses, let the employees of your firm know what events are coming up rather than letting them find out about significant events on blogs and in the newspapers.

DEMOGRAPHICS: The rise of the Hispanic vote was a major discussion during the elections. Did the Republicans lose the Hispanic vote because they ignored immigration reform, because of their lack of presence at the Republican convention, or for their strong rhetoric about returning to an “English First” culture? There are definitely cultural clashes between the idealized 50’s culture they want and the increasingly ethnically and racially diverse culture of America in the 21^st century. Regardless of which culture is dominant, women will continue to be 51% of the population. In addition to numerous gaffs about the role of women in America, the Republican party failed to deliver a message that was compelling for independent women voters. The demographics of the Republican party are: older,  wealthier, more male and more Caucasian than the Democratic party or independent voters. The Republicans have typically supported: higher military spending, lower taxes on the wealthy, no civilian gun restrictions, greater restrictions on immigrants, etc. It will be difficult for the Republicans to give up (or change) these policies, without giving up the members who are so tightly attached to each policy.

While the average corporation is not dealing with these specific issues, major corporations are dealing with a similar problem. The most senior managers of any firm tend to be older and more conservative than the managers that report to them. A tier or two down, and managers may question why change cannot happen in leaps rather than small steps. The teams that manage each change project  have until recently reflected the demographics of senior management, who a few years ago were middle managers. Today, you need to see that project teams are more reflective of the company. There need to be more women in senior positions on teams, if only to better represent the greater number of women in corporate management positions. Many companies have gone global, or use outsourcing in countries like India and the Philippines.  Are members  of the branch office represented when headquarters makes plans? If your firm has moved heavily to outsourcing in the last few years, then your “workers” in these outsourced firms probably have no one to represent them when change plans are developed. However, if you ignore the significant cultural differences in this workforce, there may be unintended consequences for your projects.

Change takes time to happen. Almost all the very difficult changes that are facing the Republicans have been under discussion since the last Century.  Eventually, though, the issues of the future become the issues of today. This is a time of big change, for the Republicans and for every corporation. Today, we have just looked at the foundational changes in America, but in our next blog, we will look at some policy changes and possible solutions. But for today, that’s my Niccolls worth!

It is strange, but true, that more people base their lives (and their decisions) on superstition than on facts. If you watch baseball, you will soon notice that many pitchers go through strange gyrations before they throw the ball. Superstition! You need to repeat certain steps if you want to win. Sports, maybe. But superstition in corporations? It may seem ridiculous that a bank, research firm or legal department is ruled by superstition, but in fact, we often act without proof that our actions will do any good. Consider that in America, only <a href=”http://www.gallup.com/poll/114544/darwin-birthday-believe-evolution.aspx”>40% of people</a> believe in evolution, but 50% or more <a href=”http://www.christianpost.com/news/how-many-americans-believe-in-ghosts-spells-and-superstition-29857/”>believe in some form of superstition</a>.

When we are in uncertain times, bet on superstition winning over facts. Face it, we all like to follow a routine, and we don’t like change. In many ways, that’s what superstition is, a routine that you’ve fallen into. It probably doesn’t do anything, but you’re afraid that if you ever stop… something bad will happen. If you’re a follower of Lean Six Sigma, this probably sounds pretty familiar. However, instead of calling these non-value added processes superstition, you could call them waste! When we watch a horror movie, we see the clichés that have become our new superstitions. We all know them, the really dumb things that actors do in movies, especially when the monster is just behind them. But we do expect the movie to follow a certain plot, and so we have these clichés.

Well, we’re not in the movies, and Halloween comes but once a year. We may live in a superstitious world, and we may have bad days at the office with just one too many cliché, but we can break this pattern! If we all stay together, and no one gets lost. No that’s not right. OK, follow me if you want your projects to live! No I’ve heard that one before. How about… try these tips and see if they help?

DON’T LOOK IN THE BASEMENT: Every teen slasher movie has someone who goes into the basement, and never returns again. In the audience we’re all thinking, “Why would you go down there? It’s dark, and the killer is ALWAYS in the basement. Dude… that’s the last place you want to be!” Well, there are a lot of projects in everyone’s basement. These are the projects that could be of some use, might even make you curious if you should start on them, but they don’t have significant benefits. If you have projects in the basement, leave them there. Maybe these projects were put in the basement because there was too little agreement and too much dissention to make them work, without killing a lot of your political capital. Poor innocent political capital. Leave them in the basement until you’ve cleaned up your other projects. Dig up projects when you need to, but learn to leave the basement locked until you have a good reason to go down there.

BEWARE THE FULL MOON: The moon rises every 28 days, as it always has. But not everything in our firms follows an eternal and unbreakable pattern. In fact, most things change, although it may take a very long time for change to happen. One way to increase the speed of change is to inject new technology into your project portfolio. Perhaps you can even leapfrog technology. Instead of replacing desktop computers with laptops, you might move directly to Tablet computers or smart phones. Breaking your old pattern can have magical results!

PROTECTION FROM THE EVIL EYE: From four leaf clovers to horseshoes, we have endless charms and relics to protect ourselves from the unexpected. In project management, operational managers have something similar. It’s called a contingency staff. Contingency staff is additional staff that can be brought in during peak work times, when weather or disaster keeps staff from the office, during flu season or any other time that additional staff is needed to keep the work moving. However, when you have had a contingency staff for a very long time, your “good-luck luck charm” gets comingled with regular staff. Over time contingency and core staff are lumped together, and you no longer know the cost of getting work done. Contingency staff, which may be temps or offshore staff, can be lost in reporting and left off of your service’s expenses. Now that’s Scary! When you put your project together, remember to identify all contingency staff and determine how it fits into the baseline for your operation’s cost.

THAT SCOTTISH PLAY: Wording is everything. There is a superstition among actors that when you work in the play “MacBeth” you cannot say its name, or you will have bad luck. Every firm has culture, and every culture has hot button terms. At JP Morgan, they want outsourcing but not offshoring. Be careful not to confuse the two when you launch a project. President Bush (senior) learned that you can only reword to a certain extent. Taxes, a very unlucky term for conservatives, were particularly out of favor when he became president. In fact he campaigned on a motto of, “Read My Lips… no new taxes!” However, when he then added “revenue enhancements,” well, he had some bad luck in the next election. Your culture may vary, but if you carefully craft your arguments for change with an understanding of the magic words for acceptance and rejection, I will predict much success in your future.

THINGS MAN WAS NOT MEANT TO KNOW: Every project manager and PMO director understands the power of the skeptic, and how these managers and decision makers can throw up barriers that hold back important projects. They don’t want you to make any changes or rock the boat. But even the most reluctant member of the project team has some connection to the goals of your project. You need to discover that connection. If it’s helping the firm achieve its goals or advancing that mangers own goals, there is almost always some connection that can be developed to move a project forward. In old monster movies, if you wanted to villagers to help you, you needed to marry one of the locals or go through a painful initiation. It may not be quite that painful to get your project team behind you, but you may need to sacrifice… something. Negotiation, compromise and persuasion are skills that needed on every project. If you can facilitate the right deal at the right time, you just may be able to get the villagers to leave their pitchfork and torches at home!

The day after Halloween, the spooks and spirits return to their resting places for yet another year. Come the morning we will go back to work and prepare to do battle again to close out our project portfolios. A night of debunking superstition and mystical cliché may not change us completely, but it may make our projects just a little less frightening. So it’s back to work and here’s hoping that all your gravestones… ahhh… milestones are on time. At least, that’s my Niccolls’ worth for tonight!

For years, we have worked under the assumption that globalization and outsourcing work and work well. Yet, in the 80s most decison makers believed that there were significant, if not insurmountable barriers to globalization. Manufacturing and purchasing was much more local. It made sense to buy from local vendors rather than using centralized, lower cost supply chains.  It took a long time, but we all learned that our new eternal truths were: central, global, and often involved distant locations. However, we have seen ever-widening cracks in our beliefs about how business fundamentally works. For example:

Taxing the Internet: Years ago, we knew that bricks and mortar were dead, when internet merchants were exempted from sales tax. How can a local business compete against this huge advantage? Well, that advantage is now trickling away.  California is now charging sales tax, making it eight states that have leveled the playing field for traditional stores, with 6 more states about to impose a sales tax on the Internet.

FedEx Restructures: Which explains why FedEx is restructuring its business model. Back in 2000 FedEx did its IPO based on the growing need by Internet merchants for delivery services. Now, FedEx believes that it’s time to cut their Express services, raise the price for all premium shipping, and move resources into lower cost shipping options.

Fuel costs Drive Location: The cost of fuel has been rising ever since the beginning of the Iraq war more than a decade ago. The farther away you manufacture, the more fuel it takes to bring that product to your market. A sudden spike in the cost of fuel, and a storm that delays the arrival of a container ship, and the profit from a billion dollars in cargo disappears. The uncertainly of fuel costs and weather in a world of global warming, and all of those offshore factories are not nearly as attractive as they used to be.

Outsourcing to America: The cost of local labor has dropped in the last few years, and domestic productivity is rising. The justification for offshore manufacturing of high price tag goods isn’t what it used to be. Look at cars. Most of the Japanese and Korean cars that Americans buy are built in Kansas. That’s where China is setting up factories. When it comes to cars, there is still a bias towards the Japanese cars being better built and a better buy. But did you know that the top-rated Toyota Camry is it’s not only made in the US, but it uses more US labor and parts than any other car in the world! Japanese designed, and American built has produced the best product in its category.

If you manage projects, you need to know what “normal” looks like. Today basic project assumptions, such as “farther away means lower cost,” are no longer automatically true. Big changes are on the way. The changing value of distance isn’t just something that internet businesses need to think about. Take a look at your own firm’s supply chain. How dependent are your projects on getting products through express shipment?  Take a recent IT project, and assume two more days to ship every order needed to complete the project. How many projects are based on outsourcing or offshoring fueling a financial benefit?

Take a close look at your basic project assumptions… are your assumption up to date? Is it time to review your least successful outsourcing projects and look at how making local decisions for production and/or management might turn it around. Yes, it’s a Bizarro world, but this is your big chance to fix the wrong assumptions of the last few years. Hey, Bizarro is looking better every day!

As we churn through the various scandals of the last few years, there seems to be a consistent theme from top executives: “It’s a big company, and I didn’t personally know that this was happening.” Moving over to media, we have Rupert Murdoch and the hacking scandal. Here, one of Murdoch papers (the Sun, run by his son) continues to show  evidence of government bribery, influence peddling and attempts to intimidate or control government officials. The younger Murdoch said that he didn’t know about the hacking scandal.  To take a look over at Siemens, still recovering from the global bribery scandal that started to surface almost 10 years ago. Jamie Dimon at JPMC initially characterized the firm’s $2 billion loss as a “tempest in a teapot.” Dimon also said, in a number of different ways, that JPMC is very big and the CEO can’t know everything. And he’s right.

Just for a  moment, let’s set aside the cynicism that we all have when we hear that well-paid executives missed the critical details of a financial crisis, bribery case, insider trading, security fraud or influence peddling scheme. Let’s assume that these are not cases of fraud or incompetence. Let’s assume that, at least as these issues get started, that we’re being told the truth. These are big companies and there is so much going on that it may not be possible to know everything. In part, that’s why big companies produce so many management reports. However, when I look at these management reports, they are not always that informative. What are they doing wrong?

• Presentation: Some reports have the right data, but it’s not presented in a way that is easy to understand. Perhaps a table would be more informative if it was presented as a pie chart?
• Size: Reports are too big aren’t going to be fully read. I’ve seen “management reports” that are hundreds of pages long. IF it’s that cumbersome, it’s not going to be read every week or every month. Do your report designers understand what makes a report readable?
• Duplication: Many times executives receives a lot of reports, and one report duplicates the information or the conclusions from another report. Where there is a lot of duplication, there is a lot less reading and comprehension,  and important points are missed.
• Subject: It may be a good report, but it’s not covering an important subject. Maybe it was important subject years ago, but it is no longer something that interests an executive or will lead to an executive action.
• Metrics: I’ve seen beautifully designed reports, that are well-designed and just the right size, that even hit the right subject… but that use the wrong metrics to track the issue.

Getting executive management reports right, isn’t easy. It’s hard to fight the trend of reporting what everyone else does,  instead of reporting on the things you need to know and will act upon. It’s easy to pack “executive” reports so full of information that no one ever reads it. And it is just too easy to create a report that misses the key metrics you need. When these mistake are made, executives genuinely do not know what’s going on in their firm. That’s why you, project managers and PMO directors, need to be sure that the reports your organization is creating are the right reports. Take a look at your project portfolio, when was the last time there was a major overhaul of reporting? Has anyone started an “executive reporting” project in the past few years? Your firm… every firm… spends a lot on reporting. Isn’t it time that everyone made sure that the people that run your firm are getting reports that they actually read?

Great executive reports are rare, and they are because they are difficult. However, the exceptional executive report is the best guarantee that  executives know what’s going on, regardless of how complex their operations are. This is a really big issue. The number of times we see executives in front of the Congress, the courts or the media trying to explain what went wrong in their firm is a good indicator of just how rare real transparency is in corporate America. When a firm has transparent operations, it’s a lot harder for scandals to start, and you can put the brakes on a problem when that problem is much, much smaller. At least, that’s my Niccolls worth for today!

The source of the problem, the “Gemba” in Kaizen/Lean quality management world, was that this “insurance” program changed, apparently without authorization or notification. Senior revenue producers, especially in the finance world, may think it’s peculiar to speak in terms of project management or quality control when looking at the actions of senior managers.  Yet, without this discipline, problems happen. Carefully examine the discussions between JPMC and the government, and you see that this “insurance” program looks more like a profit center. That’s a big change with a lot of implications for the business model. An acceptable risk to protect assets is not the same as an acceptable risk to make a profit. The Chief Investment Office either made or was on the way to make this transition without a transition program to support the changed role.

According to Bloomberg BusinessWeek, “JPMorgan altered the risk model in mid-January without telling investors…” Back in May the New York Times stated, “JPMorgan’s office, with a portfolio of nearly $400 billion, had become a profit center that made large bets and recorded $5 billion in profit over the three years through 2011.” The change in roles may have accelerated after January 2012, but the Chief Investment Office was at least dabbling (if a $5,000,000,000 profit can be considered dabbling) with a more risk oriented role for years. It’s not clear if all the money or just some came from this hedge fund, but the role of the OFFICE seemed to move steadily towards riskier and more profitable models. Even if the intention was still to protect assets, we shouldn’t be surprised that the thinking of this office was in transition and would eventually apply that thinking to all assets under its control. When billions of dollars of revenue started to appear in this office, didn’t anyone question how this financial alchemy was possible?

What we’re seeing is a combination of events. First, when money starts to flow in a financial firm, people tend to get out of the way. I don’t think that requires many explanations, and it’s why there is so much discussion about controls… and whether these controls should be imposed by the financial firms or the government. Even Jamie Dimon agrees that there must be more control, “Mr. Dimon said that there should be specific limits on the types of trades that failed. In this case, however, he said, not enough limits were erected.” However, there is another factor, one that is pretty difficult to understand. Let’s call it the “invisible Gorilla.” YouTube created a buzz a while back with a video about people passing around a ball. The video instructs you to watch the people in the video and count the number of times the ball is passed. Half way through the video (which runs less than a minute) a guy in a gorilla suit walks across the stage. You are now asked, “How many times was the ball passed (16 times)? You are then asked if you saw the Gorilla. About 40% (mostly the people who got the ball passing number right) say, “What Gorilla?”

The human brain is VERY bad at multi-tasking, regardless of what the average teenager thinks. This video highlighted the problem with texting and driving at the same time. People are bad multi-takers because we don’t really multi-task. Instead we selectively ignore information. Individuals who can hyper-focus well, type “A” personalities like Wall Street senior managers, can perform complex tasks breathtakingly well and still ignore a “Gorilla” staring then right in the eyes. Add to that the prejudice we have that individuals who make millions of dollars a year have brains that can handle situations that confuse the rest of us. While some people are better at some tasks, asking a single brain to multi-task (which causes mistakes), hyper-focus (which causes blind spots), and take responsibility for income generation with confidential investments (which limits controls, inputs and awareness of events by others) we create a risky mix of human frailties. That’s why project management and quality control needs to be more involved in top level banking activities. These methodologies take these shortcomings into account and offset them with areas of human strengths.

I don’t know if Wall Street is ready to hear this, think about how long it’s taken us to realize how bad we are at driving and doing anything else. Still, I think that we need to rely more on structured processes that create the visibility that senior managers need. At least, that’s my Niccolls worth for today!