Consultants' Corner

4 Tips to Get Beyond One-stage Thinking

Merit Smith
Insurance Experts' Forum, June 8, 2010

I admire Thomas Sowell for many things: his scholarship, his clarity of thought and skill with language, and his life story. (How many high school dropouts have PhDs in economics and teach at Stanford?)
Sowell has much to tell executives who are responsible for service operations in complex organizations.

An example of his wisdom is his concept of “one-stage thinking.” He explains one-stage thinking by telling a story of how, as an undergraduate, he proudly answered a question in class by explaining what he would do to solve a problem. His teacher patiently listened to his answer and asked a simple question: “And then what will happen?” Sowell went on to answer the second question. The professor again asked: “And then what will happen?” As Sowell dug a deeper hole with his answers, he “began to realize that these reactions would lead to consequences much less desirable” than his first answer suggested.

Sowell contends that most bad policies involve similar one-stage thinking—the type of thinking that never considers the question: “And then what happens?”

Here are four practical things service executives can do to minimize the impact of one-stage thinking on their operations:

1. Probe and question your staff’s proposals and plans along the lines of Sowell’s professor. “And then what happens?” or “Will your proposal result in any side effects?” As you probe for secondary impacts, expect inexperienced staffers to think first of other good impacts of the proposed action rather than seeing possible unintended impacts. Management education doesn’t happen only in MBA programs: the boss’s boss can be an excellent, if intimidating, instructor. Play this role wisely and gently, perhaps privately.

2. Build the topic of second-stage impacts into your decision process. When you assign an issue or project, specify you want them to anticipate the negative secondary impacts and develop a plan to avoid or minimize them. If you do this consistently and use the “And then what happens” probe, your staff will quickly sharpen their thinking on second-stage impacts.

3. Use multiple metrics when you assign issues to staff. If we ask the staff to reduce the project backlog by year-end, for example, they are likely to come back with a plan that eliminates the backlog, but creates a nasty budget variance or disrupts other year-end service requirements. Encouraging your staff to see a challenge with several metrics—especially if the metrics seem to be at cross-purposes—can get them to begin to use second-stage thinking.

4. Review completed projects to encourage second-stage thinking. Use probing questions: “As we did this work, what did we learn? Were there surprises? Were there any unintended consequences for customers or end-users? How could we have better anticipated or even avoided the surprises?”

If you are interested in Sowell’s ideas, I recommend reading his book Applied Economics. While he is an economist, his ideas apply in many management situations. Reading Sowell is a great way to move beyond one-stage thinking.

Merit Smith is VP & director, health care at the Robert E. Nolan Co., a management consulting firm specializing in the insurance industry.

Readers are encouraged to respond to Merit using the “Add Your Comments” box below.

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The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

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