Fools are too Smart to be Foolproofed!


Today’s post is inspired by a 16 March, 2011 National Post article titled “Politicians: Don’t just raise taxes”, by Vern Krishna, page FP14. The article discusses how organizations are able to manage their “effective” nominal tax rates by moving their capital globally and where they establish their offshore tax holdings. The inspiration for me is a reminder that when we establish new rules we create new sets of unintended consequences. Kirshna notes that US corporations have about two trillion (YES trillion) dollars parked in offshore accounts. If they were to bring those dollars back into the US they would face significant “tollgate” taxes.

Krishna notes that all rules are behavioural. Hence the consequences will be behavioural too. My post’s title reminds us that nothing is foolproof because fools are so damn clever at getting around constraints.

In my Meta-decision making process, I ask clients to consider the consequences of choice (actually several option choices) and make the effort to discern the likely unintended consequences. I view unintended consequences as sources of uncertainty and risk (U&R) and self induced U&R at that. It is well nigh impossible to discern “black swan” like uncertainty, but we should be able to at least envisage some of the U&R arising out of our decisions.

Why is this useful? For two reasons:

  1. Understanding possible unintended consequences can influence what choices we make. If we only make choices based upon a more classical cost benefit type analysis we will be choosing without comprehending what can go wrong (and it almost always seems to go wring somewhere). If we appreciate the likely range of unintended consequences we may choose an option that is more likely to have fewer/more manageable “crap” than another that on the surface seems to provide better cost/benefits.
  2. Understanding possible unintended consequences better enables us to prepare for and, if necessary, manage them. Therefore we are able to develop and execute better implementation strategies.

My approach to doing this is to look for choice unintended consequences arising from three locations:

  1. External sources arising from successful through to unsuccessful implementation
  2. Implementation sources – from what implementation approaches we choose to use
  3. Who is involved sources – U&R arising from the key players in implementation and operation. Remember, the number one reason for implementation failure reportedly is sponsorship failure.

Of the three location analyses, the third is the most difficult as it typically involves those in the room. I am asking them to acknowledge how they may be instrumental in implementation failure. So not every client is interested in examining this too carefully. But at least, in an implementation failure post review, those involved can reflect on their contribution (if any), and next time take this learning into account.

The above approach will appeal to those of us who tend to be “risk averse” around significant decisions. For those clients who accept this approach to doing U&R analysis, they feel better about being ahead of the proverbial puck.

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About 123stilllearning456

As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
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