We humans aren’t always up for change as evidenced by Newton’s laws.
On July 5, 1687 Sir Isaac Newton published his work, Philosophiœ Naturalis Principia Mathematica, what we commonly call Newton’s laws of motion. I am sure you remember Newton’s laws of motion? Here’s a layman’s version (with apologies to Sir Isaac):
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First law: A body (mass m) in motion stays in motion unless it is acted upon by an external force (F). Picture a big boulder rolling down a shallow slope; just enough slope to keep the boulder rolling, but not enough for the boulder to gain speed.
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Second law: A body will accelerate if pushed in the same direction as it is moving, i.e., F = ma (we’ll need the formula later; I know, you were told there would be no math). Same boulder, now rolling slowly so you catch up to it and push it from behind causing it to go faster.
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Third law: The forces of action and reaction between two bodies are equal and opposite. This means that whenever a first body exerts a force F on a second body, the second body exerts a force –F on the first body. F and –F are equal in magnitude and opposite in direction. Our boulder example again, only this time it runs into another boulder, which causes the first boulder to slow or stop and the one it hit to steer off in the opposite direction of the hit.
So that’s what you already knew. What I bet you didn’t know is that Sir Isaac Newton spent a lot of time at Edward Lloyd’s coffee shop in London (Lloyd’s of London). Sir Isaac was a professor after all, and was nothing if not observant. For years he listened in on the conversations of insurance professionals as they talked about their businesses while sipping non-fat vanilla lattes. He soon postulated the three laws of business:
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First law: A business (mass m) will remain on its course, good or bad, profitable or unprofitable, forever if no new forces act upon it.
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Second law: The larger or older a business is (big m), the more force (change agent F) it will take to change its course.
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Third law: If a force (F) is exerted on a business (mass m) to try to change its course, expect some pushback ( -F).
Sound familiar? Think about your own organization. Now do they ring a bell?
I love the insurance business, don’t get me wrong. That said, I do think somehow Newton’s laws of business have a stranglehold on the industry. Certainly there are exceptions, but far too many companies are in a “state of uniform motion.” And way too many companies struggle to change course. Still others try but are forced to give up when change is not well received by those affected.
So what can an organization do to overcome Newton’s laws, or in reality, use the laws to their advantage? Let’s tackle them one at a time.
First Law in Action
Insurance is cyclical; soft and hard markets, profitable and unprofitable cycles. The common response is, “That’s just the way it is, and we can’t do anything about it.” To change speed or course requires a strong desire and some planning. It also requires an understanding of your mass m (your boulder, i.e., your company).
As Davenport and Harris state in “
Competing on Analytics,” you must know what you are really good at, that is you must know your Distinctive Capability
1. So how do you get a deeper understanding of who you are as a company? You do the analysis—identify your teams talents and limitations; understand what your profitable and unprofitable clients “look like”; determine how and where you make money (or not); pin down your processes; know what additional corporate assets you have to work with; and so on. Use all the tools available including data analytics, descriptive and predictive modeling, and sometimes, outside help. You really need to understand the composition of
your “boulder” and the nature of the landscape it is rolling down, including the other boulders (competition) that you may run into.
Second Law in Action
“We have always done it this way.” It pains me to even write that statement. In a young organization, you don’t hear this statement that often, if at all; everything is new. The smaller the mass m (the company), the less force required to change its course; Newton’s second law of business. And generally the larger and/or older the company, the greater the mass m = greater force required to change course. So if you hear, “We have 2000 claims people scattered across the country; changing will be impossible”, will it? No, not really, but the larger the mass m, the harder it will be to achieve the change.
Here is where talented leadership is very important. Gain a following first (a big part of being a leader), paint a clear picture of where you want your boulder to roll, and people will get behind and push. Once the momentum picks up you may find many competing forces, so put some governance in place so the most important projects get everyone’s attention. And have strong project management to keep the force applied in the right direction. Make sure you have quick, small successes so people “see” progress.
Third Law in Action
You have taken a good assessment of your company, you have good leadership in place, you have charted a new course and speed. You started projects with governance in place to assure they are the “right” projects. Everything is rolling along, but Newton’s laws are still present. Now the troops start pushing back. People tend to know the third law best. Proactive collaboration with your teams goes a long way to overcoming human pushback. When people participate in the process and know what they are doing, -F is minimized.
Changing course isn’t easy. By the same token, it is very easy to get off course. There are many forces F exerting influence on your company, internally and externally. Quality program management is worth its weight in gold (even with today’s prices). As you work to change course, Newton’s Laws will always be in play. Making adjustments as you go will be critical to success. The larger or older an organization is, the harder the course change. Change is inevitable whether you’re changing your boulder’s course, or letting your competitors’ boulders get in the way. But change can also be fun. Embrace it and think about Newton’s laws. You can make it happen.
1 Competing on Analytics, The New Science of Winning”, Thomas Davenport and Jeanne Harris, 2007