A Word About Culture: Part Two

This is the second post in a series inspired by a Harvard Business Review article, “The Hard Truth About Innovative Cultures”, that posited these five characteristics of effective corporate cultures:

  1. Tolerance for Failure but No Tolerance for Incompetence
  2. Willingness to Experiment but Highly Disciplined
  3. Psychologically Safe but Brutally Candid
  4. Collaboration but with Individual Accountability
  5. Flat but Strong Leadership.

After distinguishing between mistakes and failures in the first post, we continue the series with an examination of experimentation and discipline from the perspective of our own organization.

First Things First

The premise of the article’s point #2 is summarized here:

Organizations that embrace experimentation are comfortable with uncertainty and ambiguity … They experiment to learn rather than to produce an immediately marketable product or service … [but they] select experiments carefully on the basis of their potential learning value, and they design them rigorously to yield as much information as possible relative to the costs. They establish clear criteria at the outset for deciding whether to move forward with, modify, or kill an idea. And they face the facts generated by experiments.

It’s fair to suggest we face facts first: We don’t know everything. We can’t predict everything. We can’t control (the outcomes) of everything. So, we approach every act of experimentation with discipline, informed by the years we spent as developers before founding Finys. Those facts — and the fact that our customers rely on us to make their businesses run better — compel us to approach new features or capabilities not as experiments but as trials based on previous empirical experiences: If this did that, we expect a particular variant of this to yield something new that’s a correspondingly particular variant of that.

Faith In, Faith Out

We choose to reward the faith our customers place in us by approaching every act of experimentation with all the discipline and all the knowledge we’ve acquired to date. We begin with clearly articulated and unanimously shared objectives. We celebrate the experiments that accomplish what we thought they would. And we nuke the ones that don’t. We won’t reward the faith of our customers by playing fast and loose with their businesses or their futures.

Uncertainty and ambiguity are parts of life and living. But facing facts with discipline is an effective way to foil failure.

A Word About Culture: Part One

A recent edition of Harvard Business Review carried an article entitled, “The Hard Truth About Innovative Cultures”. At first, we thought it was about Greek yogurt. Then we read it and learned it’s about the five characteristics of effective corporate cultures. Here they are:

  1. Tolerance for Failure but No Tolerance for Incompetence
  2. Willingness to Experiment but Highly Disciplined
  3. Psychologically Safe but Brutally Candid
  4. Collaboration but with Individual Accountability
  5. Flat but Strong Leadership.

This is the first in a series of five posts in which we will examine each of those characteristics from the perspective of our own organization.

Fine Lines

Any discussion about the relationship between failure and intolerance has to start with distinctions and balance. The article says this:

A tolerance for failure is an important characteristic of innovative cultures … And yet for all their focus on tolerance for failure, innovative organizations are intolerant of incompetence.

To strike the appropriate balance, we tend to distinguish mistakes from failure. We tolerate honest mistakes resulting from clear thought, sincere intents, and unforeseen eventualities. We don’t tolerate failures resulting from thoughtlessness, carelessness, or recklessness. And we take to heart a conversation we once heard over lunch at an industry conference:

Person 1: I heard one of your people made a huge mistake.

Person 2: Yep. It cost me $50,000.

Person 1: Did you get rid of the guy?

Person 2: Why would I do that? He didn’t piss off the client. And I just paid $50,000 for his education.

As far as we’re concerned, failing to try is a bigger indicator of incompetence than making an honest mistake in a sincere, well-thought-out effort. And lessons hard-learned are often the most effective.

A Calculated Gamble

There’s no such thing as perfection. We neither demand it nor expect it. But we do expect conscientiousness. We do expect honesty, integrity, and thoughtfulness. And we do expect people’s best efforts, even as we recognize anyone’s best efforts may fall short on occasion. It’s the gamble you take in business, in hiring, in being willing to trust and observe before you judge.

That approach has worked for us since 2001. And it’s kept our culture active, even though we’re not in the yogurt business.

Changing our approach now might be a mistake … or worse.

Technology Emerges … Unless it Doesn’t

We came across an article the other day on a site called, The Frisky (we’re not making that up). The article was called, “11 Emerging Insurance Technology Trends to Watch in 2019”, and it featured, wouldn’t you know it, an infographic. It also made this prognostication:

$2 Billion will be invested into emerging insurance technologies known as “InsureTech” … to completely disrupt the way consumers buy insurance and initiation [sic] claims.

That statement stands in stark contrast, of course, to the oft-stated contention that the insurance industry operates in the technological equivalent of the Stone Age. So, where’s the middle? And is there truth in it?

The Truth is Where You Find It

The fact is the insurance industry doesn’t exist to introduce or pioneer technology. But you’d never know that from reading most of the industry literature. That would have you believe driverless cars, programmed with nanotechnology and controlled by mobile devices, were being monitored by drones carrying wearables, running applications from the cloud, connected to the Internet of Everything and fulfilling Richard Brautigan’s promise that we’ll be “All Watched Over By Machines of Loving Grace“. Not so much.

As implausible as it seems given the fact that the speed of consumer adoption of technologies far outpaces entire industry adoptions of technologies, even the retail industry is having trouble adjusting to mobile. You can create technology. But that doesn’t mean it’s ready to emerge. You have to solicit the input of the people for whom it’s intended. You have to keep it up to date and functionally capable. You have to monitor its usage. And you have to resist surprise and frustration if the tried, true, and deeply entrenched do not go gentle into that good night — especially since practicality has a considerably longer shelf-life than sensationalism.

Consider this: When’s the last time you read an article about the number of insurance companies still working on green screens? Many insurers still do. When’s the last time you heard anyone admit to still using a dial-up modem? Some people still do. When’s the last time you heard anyone in any industry say anything other than their technologies were emerging, disruptive, or innovative? And why do you think that is?

It’s because talk is cheap. It’s also less expensive and more practical than chasing the rainbow and betting the ranch on emerging technologies.

Practical Is As Practical Does

And speaking of practical, is any industry more practical than insurance? Insurance has to be practical by definition. If you’re in the business of reserving the premiums of your policyholders against potential losses, what else could you be?

Yes. Like every other industry, insurance needs to keep its eye on emerging technologies. But its first look has to be at reliable ways in which to serve its constituents, minimally risky ways in which to deliver its products and services. If insurers spent their time and attention pursuing emerging technologies, how much would be left in which to satisfy and retain their policyholders?

We love our clients. They’re in the insurance business. That’s why we’re in the technology business.

For our clients, technology will continue to emerge as it can.