Sunday, May 20, 2012

Sunday Essay - communications, risk and reform weariness

One of the themes underlying my last post, Jessica Irvine's memory loss,  as well as many previous posts were the difficulties associated with real reform whether in business or government. There is a deep seated reform weariness now in Australia and indeed most of the Western World. People have become cynical and justly so.

One of the problems lies in the word itself; reform just means re-form, but carries the connotation of improvement; when improvement fails to materialise, when the costs are obvious, people turn off.

Like reform, the word stability has positive connotations. Stable means steady, solid. Reform means change, stable means keeping things steady; change may happen, but it's manageable.

People crave stability. They need stability for personal planning, They may want change, but it's change on their terms. How can you plan a family, commit to a mortgage, look to the future, if you have no idea as to what that future might hold?

Like reform, the word stability has also acquired negative connotations. Stable means dull, unadventurous, cautious about change.

Since the Second World War, the management literature has been dominated by a relatively small number of themes. Today's brief essay takes two, communications and risk management, to examine the interaction between the conflicting desires for reform and stability.

Wikipedia defines public relations as the practice of managing the flow of information between an organization and its publics.

This definition is reflected in the definition announced in March 2012 by the Public Relations Society of America after a member vote:  "Public relations is a strategic communication process that builds mutually beneficial relationships between organizations and their publics." The defeated definitions were "Public relations is the management function of researching, engaging, communicating, and collaborating with stakeholders in an ethical manner to build mutually beneficial relationships and achieve results." and "Public relations is the engagement between organizations and individuals to achieve mutual understanding and realise strategic goals."

Wikipedia defines risk management as the identification, assessment, and prioritisation of risks (defined in ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.

Both definitions reflect language and concepts now deeply embedded in both management and public policy.

The PR definition manages to include the words strategic, communication, process and mutually beneficial. What modern government program or corporate mission statement would not use very similar words?

The risk management definition is more highly structured, the English is clearer. It describes an organised process to identify a problem or set of problems and then respond to them. Yet when you look at the words you find identify, assess, prioritise, coordinated, economic, minimize, monitor, control, probability, impact, maximise, opportunities. Again, they are all very modern management speak. You will also see an implicit focus on standards and standardisation, another of the global trends in management over the last fifty years.

The words public relations replaced an older and and in many ways more honest word, propaganda, that had become effectively discredited during the Second World War. The words also reflect the desire of practitioners to give their craft a professional status, respectability.

As the concept of public relations itself acquired negative connotations, it began to be replaced by a still broader term, communications. We see this today not just in the university or vocational courses, but in the "communications strategies" that have become mandatory elements in any government or corporate initiative.

The desire to identify and avoid risk is as old as humankind itself. As societies became more structured, activities more complex, structured approaches emerged. We sought to propitiate the gods to counter risks beyond our control; we sought advice from oracles to give guidance on the unknown; where risks were known, we took action to try to avoid them, developing insurance. 

The idea of insurance is a very old one. According to Wikipedia , the first methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.

Chinese merchants travelling treacherous river rapids would redistribute their wares across vessels to limit the loss due to the capsize of a single vessel. The Babylonians developed a system recorded in the Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen.The Greeks and Romans introduced the origins of health and life insurance c. 600 BC when they created guilds called "benevolent societies" which cared for the families of deceased members, as well as paying funeral expenses of members.

The rise of insurance as we know it today can be traced to the Great Fire of London, which in 1666 destroyed 13,200 houses. In 1680 this led Nicholas Barbon to established England's first fire insurance company, "The Fire Office," to insure brick and frame homes.

If the desire to identify to identify and avoid or control risk is as old as humankind, the modern approach to risk management as a structured approach dates from the 1960s and, like the project management discipline, is directly connected to rises in project complexity. From this initial start, it emigrated to full professional status and then into every aspect of life.

Herein lies the problem. In its emigration, risk management moved from a focus on managing risk to achieve best results to one of avoiding and controlling risk. Risk is inevitable in any form of human activity. Our greatest advances as well as our greatest failures have come about because people went ahead regardless of risk. It's very hard to do that today.

Let me try to illustrate by example.

When I first studied project management, both communications and risk management were integral elements of any project plan. Today, both the communications and risk management plans are often separate and indeed larger documents than the project plan itself. They are also subject to greater scrutiny and often separate control and authorisation procedures. Leaving aside the resource implications, the amount of time and cash spent on communicating and risk avoidance as opposed to actually doing, the result can be decision paralysis.

I may seem to have come a long way from my point about reform weariness, about the links between reform and stability, but there is a connection.

Central to the current emphasis on communication is the desire to present what is being done in the best light, to distinguish from the past, to emphasise the new.

If we define communication in terms of imparting the information people need, modern communications strategies are not that at all. Rather, and to use a now old fashioned word, they are simply propaganda. The aim is to sell a message, not communicate. The inevitable disappointment and cynicism that results impedes real reform.

This is fed by the focus on "risk management". This time I have put the words in inverted commas just to emphasize my point about the difference between risk management and avoidance. Inability to bring about real change, the creation of "safe" options that are then packaged for communications purposes, adds to the problem.

I happen to believe that Australia does need real reform and that means change and often personal hurt. Current approaches to risk management make that hard to achieve. Yet I also recognise the desire, the need, for stability that so many Australians feel. In selling everything as reform or change in the way we do, we add to the prevailing uncertainty in people's minds about the pace of change.

In a way, we have managed to get the worst possible combination of results.   


Winton Bates said...

Jim, I agree with you that risk management has come to focus too heavily on risk avoidance because of concerns that a more balanced approach to risks would be too difficult to sell to the public. One effect of this is to provide an impetus to greater government regulation. Whenever anything bad happens – a person dies from food poisoning, a child is killed while crossing a road, a building firm becomes insolvent leaving subcontractors out of pocket, investment advisors steal money from clients, etc. - it is quite natural that the some members of the public will call for tighter regulations to ensure that nothing similar ever happens again. It is much easier for politicians to accede to these requests than to attempt to explain that the costs of tightening regulation further might exceed the benefits. Perhaps it might help to be able to refer such issues to a jury of citizens who could deliberate on the evidence at some distance from the pressures of the political process. (This is not a new idea, but I only heard about it a few months ago. I am planning to write about it on my blog soon.)
One point that might be worth considering - in the context of stability, change, reform fatigue etc. - is that change is a constant element of our environment – as we used to say in the IAC in the 1970s (although, unlike Ramana in the latest article on his blog - we borrowed the idea without giving the reference to Heroclitus). Sticking with an existing set of policies in the face of change in the environment (e.g. growth of the mining sector) can involve greater risks than some policy reform. Protecting some activities from change can impose greater change on other activities. The issue is often not so much about stability versus change, but what is the best way to adjust.

Evan said...

All true I think. I suppose the best way forward would be a series of small scale experiments some of which would fail. Perhaps this isn't done much because it lacks impressive" announceables" .

Jim Belshaw said...

I agree with both points, Winton. However, I have also tried to make the point that where a decision imposes costs on some that benefit others there needs to be some measuring of and desirably some compensation for the costs to those affected.

I recognise that this is a some what slippery concept.

Dear Ramana is an interesting bloke. Having him in our loose group really adds. Look forward to your post.

Evan, to my mind you have captured a very important point. That is just the way to go. Test expecting some failures really does work.