Things I Like To Say

As I’ve been publishing them I’ve been thinking more generally about these little phrases that I occasionally parrot at people (I do actually like to say these things) and the ones I like best are the ones that are a little bit wrong. They’re all a bit right, too, but the more wrong they are at the same time the bettter because it makes you think.

People like pointing out how others are wrong and if being wrong is the price to pay for getting people to think critically about the question, so be it! Focus is the precious thing and the meta story here is that I believe these topics aren’t thought about hard enough.

*There is no such thing as innovation in insurance*

There is only innovation in risk management. As an industry we keep rediscovering the idea of bundling or unbundling risk in transactions and call it innovation. It doesn’t change the pie, though, so I’m not calling it innovation. Innovation is changing the risk itself.

*Underwriting is stopping your client from screwing you. Risk management is stopping God from screwing you*

Insurance is obsessed with information asymmetry and moral hazard. When you’re responsible for the costs of your behavior, you’re probably much more careful than if someone else is paying the bill. That’s the client screwing the risk taker and that insight underlies about 95% of the complexity in insurance. The rest of the risk is from acts of God and chance.

*Good Writing is Invisible*

The bad writer’s idea of a good writer is someone that impresses you with their writing, not necessarily with what is being said. ‘Big’ words, complex metaphors. You should write at a high “reading level”, thinly veiling criticism of simple language.

Writing is about communication. If there’s an idea or story that you’re trying to get out, the greatest sin is confusing your reader. Be clear.

On complicated topics, really great writing makes the reader feel smart, not the writer.

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The Holy Trinity of the Master Broker

[This essay is about sales and is adapted from a talk I gave to actuaries and modelers at our internal analytics conference. Sales skill is incredibly underappreciated, if it’s acknowledged at all. Perhaps the most underrated profession in the world. I try to changes minds where I can!

Remember that all of my sales experience comes from being a reinsurance broker where we facilitate transactions between sophisticated financial institutions. I’d say investment bankers probably face similar forces. Mileage may vary for people in other industries.]

Let’s first talk about what sales is not: Sales is not manipulative. It’s not a version of Gelengarry, Glenross, for those who have seen that film. Just thinking about those despicable sleezebags makes my skin crawl.

Truly great salespeople care only about finding out what the customer needs and giving it to them.  They like and respect their customers and genuinely want to help them succeed. So great salespeople sell great products. The strategic answer to getting better at sales is to just find better stuff to sell. Well, that makes it easy, you might say. Exactly! 

In some ways, sales is miraculous, particularly at specialist intermediaries like mine. You just have hire people with phones and bam, you start generating revenue. I think that generates feelings of empowerment and self-control and fuels the optimism of sales culture: the universe is full of opportunity. There are only two categories of obstacles: poor product fit (unsurmountable) and cognitive bias (surmountable).

The worst salespeople overdetect problem #1 (nobody wants to buy so I won’t try) and the second worst overdetect problem #2 (everyone will buy if I just try harder). It’s that second worst group that bothers people because they won’t go away. But at least they make money for their company.

So a great salesperson is armed with a great product and an earnest desire to make money doing the right thing. What else?

[remember all the tactics below presuppose good customer/product fit]

Preamble: the reframe

Called also the ‘spin’. The most basic and well known sales tactic. The caricature of the salesman is one that awkwardly forces an implausible narrative over weak evidence to try to ‘pull a fast one’ on someone. There is of course such a thing as a flawed narrative that should be corrected and this is an important tool.

But we’re talking about the tools of the master broker today. Journeyman brokers work on the reframe. To the master, frame detection and correction is second nature and hardly worth discussion.

Tool 1: The Breakdown

We need to cut through complexity. 

Overwhelmed buyer: “It’s too hard, we can’t get there” (everyone on my committee will have problems with this)

MASTER BROKER: “What exactly are the problems?”

Overwhelmed: “Well, A, B, C, D”

MASTER BROKER: “Ok, let’s go through those”

Psychology addressed: the most common cause of (first world) misery is feelings of overwhelm. 5 small problems = 100x the emotional load of one small problem. This is ridiculous, of course, but inescapable. Breaking the problem down lightens the load.

Inevitably what you find is that 3 of the 5 can be solved very quickly leaving only one or two really tricky ones. But one or two things can be focused on much more effectively.

Tactic 2: The Anti-Broke

We need to build trust. 

MASTER BROKER: “I’ve got a tough one here. A, B, C, D make it suck. There are some redeeming features but I’m not sure they make it up.”

Intrigued Reinsurer: (shields down) “Why? Let’s have a look”

MASTER BROKER: [cleared to talk about all the good points]

Psychology addressed: key to most human conflict is a need to feel heard and understood. Our bias is to hunt out negatives against the current of constant positive framing by (journeyman) brokers.

Emphasis of shared perspective encourages a search for agreement. If they feel like you understand their need for vigilance, they’ll be more open minded. Some of my colleagues are terrified of the anti-broke because you don’t ever really spend time talking about the virtues of a deal unless asked directly. Others are full-time anti-brokers and their success seems like magic. Everyone good uses it from time to time.

At a minimum, anti-broking is optimal when you want to have quick, low-engagement conversations with people to feel them out. The failure rate is probably a bit higher (including false negatives!) but that effect can be mitigated by an experienced anti-broker. The prize is many fewer false positive leads and deeper engagement.

Tactic 3: The Stall

We need to build focus. 

Busy reinsurer: “We can’t do this deal because of [stupid reason x]. Decline”

MASTER BROKER [one week later]: “hey, we addressed [stupid reason] like this, have a read of the attached (long-ish document)”

Busy reinsurer [one week later]: “we can’t do this”

MASTER BROKER: “did you read my note?”

Busy Reinsurer: “um, no” [Bingo!]

MASTER BROKER: “let’s have a call to go through it. When are you available?”

Busy Reinsurer: “ok, how about two weeks from now?”


Psychology addressed: often a value-adding but (apparently) borderline deal is just not worth their time now. If they don’t want to say so explicitly, they try to shove the broker off.

Don’t stop the process, slow it down. Let it play out. Eventually the pressure changes from “I don’t want to put this on my desk” to “let’s just get this off my desk”.

[Four weeks later]
Busy Reinsurer: “Are we still talking about this?”

MASTER BROKER: “Yep, you had this concern and that and we’ve addressed this way and that”

Busy Reinsurer: “Ok, sounds good. What’s next?”

This is a delicate one because you’re being a bit of a pest, which is a critical skill in getting things done with busy people. Let them lead, be patient and vigilant. Windows of magnanimity open from time to time. Wait for one.

Epilogue: A Few More Forces at Work

A good relationship is critical to all sales; it increases engagement and motivation to come to the *right* resolution quicker.

The best way to build relationships? Doing a deal! Doing a difficult deal creates a special kind of bond that makes the next one much easier.

This is why financial middlemen exist: we are repositories of negotiating success. Those that deal direct with financial markets don’t have the relationships that we do because they don’t do deals all the time. Those relationships foster better outcomes.

Politics matter, too. Deal decisions are made in committees by several layers of an organization. A good broker has relationships with all of those layers. This is often too much for one individual broker to handle so we have a “my boss calls your boss and his boss calls her boss” situation. 

I think this drove a lot of consolidation of intermediaries over the last twenty years. The clients and market organizations consolidated and grew more layers so we did, too. The structure of broking organizations reflects the deal-making structure of their counterparties. That has seriously raised the costs to new entrants, which are more or less nonexistent. More on that another day.

Sales is about overcoming many barriers: informational (do you have what you need?), psychological (are you giving this an honest shot?) and political (can you sell internally?). These are life skills. Everyone gets better at their job by getting better at sales.

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Things I Like To Say

*The Priviledge of Delivering Negative Feedback is Earned*
By delivering positive feedback. Good relationships are based on positivity and no manager whose feedback isn’t primarily positive is maximizing output. Remember, as a leader who is admired and respected positive feedback inspires your directs.

*Positive Feedback is Harder Than Negative Feedback*
For the grand moral judge inside your head, positive performance might mean “doing your job” while negative performance is “not doing your job”. Positive feedback is then very hard to earn and negative feedback comes after every minor stumble. That’s backwards. It takes real discipline not to move onto the next battle after small wins. Positive feedback requires me to pause, zoom out and talk to a direct about positive performance. My greatest weakness as a manager is not doing this enough.

There’s also the fear that too much positive feedback raises a direct’s expectations of compensation and advancement. That happened to me, actually, and I realized that I didn’t understand what drove advancement within my own firm. So I figured it out, clarified it with the direct, and now feedback in advancement-related skill development is special stuff. I love handing that out.

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Things I Like To Say

*Organizations exist to solve problems, leaders look for problems to solve*
The most important important thing an organization needs to figure out is what problems to work on. Finding good problems and maintaining focus on them is what we trust our leaders to do for us. This separates the most senior leadership from the rest of the organization a bit because they ‘don’t do any work’. As individual contributors, the highest value function is lightening the burden above us to increase the total resource the organization can devote to the highest value activities. Push your boss up the pyramid.

*Politics is Managing Relationships with Opponents*
Take opponents here to mean groups without perfectly overlapping interests. Manager tools say politics are what executives call collaboration. There’s no point in complaining about politics. Work on the relationship instead.


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Things I Like To Say

*Maintaining relationships is the hardest thing to do*

The distinction of humans is that we are social beings. We have relationships. But every day we learn and learn again why this is a unique achievement in nature. Holy cow are relationships are hard to do well. As a manager, my job is to maintain the relationships among my reports and within the organization. You know how in action movies every time someone fires a rocket launcher it looks like it’s spiralling kind of out of control (how do they hit anything with those things?). That’s communication and that’s relatinships. It goes wrong sometimes. Managing relationships is preventing and cleaning up those messes. 

That means I get outsourced the uncomfortable conversations to bring people back onto the same page. Repairing damage, understanding perspective, bringing diverging priorities together. I have to have a good enough relationship with all parties to reconcile the priorities with common ground to the blunt the tough message.

*Management is Managing Relationships*
A deeper fact is that leaders exist to solve the hardest problems organizations face. The different between a manager and a direct report is that the manager’s job is to take reponsibility for the communication within the team and then within the organization. Think of all the stakeholder priorities a company needs to reconcile using strong relationships: customers, suppliers, capital providers, mother nature, even! 

We only get the benefits of modern organizations with a class of worker to ease the social burdens of large scale cooperation. Management. 

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Things I Like To Say

*Communication doesn’t need to be pretty to work*
I envy people that aren’t scared of failure. I’m terrified of it. By far my biggest personal flaw is the fear of feeling stupid. It’s doubly destructive because it’s a communication-related phobia. If I was scared of heights or turtles or something I could easily just avoid the triggers and get on with my life. But *I* get saddled with a fear of using the most powerful tool available for human achievement (communicating). So much of my life has been wasted in over-preparing myself, over-training myself, overworking myself to build this unassailable wall of expertise only so I’d feel comfortable communiating more. Even typing this out I shake my head in disbelief. Fool.

Anyway, the point here is to keep your eye on the ball. Very few problems involve communicating for its own sake. Really you’re communicating to get something done and you really can overcome confusing, awkward communication with communication quantity. You’ll get the right message across eventually, just keep pumping away.

*[Stolen/Adapted] Communicating is what the listener does*
This is from Mark Horstman of Manager Tools (if you haven’t heard of Manager Tools drop everything and download and listen to those podcasts). I like it because it’s also wrong and thought provoking. The point here is when I say communicate above I don’t mean blabbing away at people. You need to listen to learn. One-way communicating is absolutely worthless, I cannot emphasize it enough.

*Relationships are the sum of all communication*
Simple enough so I’ll draw out another idea: not all channels are equal. If communciation is flow of water, text based communication is a trickle, phone calls are rivers and in person meetings are Niagara Falls. When I say communicate more I mean, to extend the metaphor, douse the sucker with water. Let’s say your problem is a llama. Takes lots of texts to soak a llama, right? Now stick it under this…


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Things I Like To Say

*If It Isn’t Communicated It Doesn’t Exist*
Call this an epistemological theory of business. No idea exists unless it’s discussed. No action is complete until you talk about it. No deliverable matters without a communication component.

*Every Problem is a Communication Problem*
My favorite because it’s wrong so it’s a bit jarring. Here’s a corollary: every problem can be solved by communicating more. I like to say “when you’re stuck, think first: ‘who do I need to talk to to solve this problem?'”. One of my mentors had only one solution to any problem: pick up the phone. Genius.

Now, it IS wrong, of course. Somebody has to do the work at some point. Maybe a better way of putting this is that only the easiest problems require real work. Everything else is solved by communicating. Communicating takes hard problems and makes them easy problems, which can then be solved with easy work.

All solutions worth the name are elegant and simple in retrospect. And if you communicate consistently and effectively you’ll get to that simple solution faster. Any domain: sales, financial analysis, teaching kids, physics research, everything. No hard problem ever been solved in a social vacuum.


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