Policy Reform: The Fears of Change

The optimism of the ‘new normal’ appears to have given way to a growing frustration with the pace and even the sincerity of reform. But change is difficult; three fears have to be confronted and overcome.

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Change is hard. Ask any smoker, ask any dieter. We want to change, we make public commitments, and then we fail. And we fail again. Why is change so hard? Having been involved in multiple organizational and policy change initiatives, I would hazard three key fears why policy changes are so difficult.

Fear of the Unknown

Firstly, we fear the unknown and ascribe the most dire and desperate scenarios to change, especially changes that run completely counter to our world views. Humor me and let me take you through a thought experiment.

Imagine the unthinkable. A change in government. Would a new leadership be forced to say this? “When my government first assumed office…..businessmen and industrialists, far from hailing this event as a happy augury for the future, felt for the most part that the end of the world was around the corner. The stock market collapsed and there was a flight of capital out of Singapore. Several people fled the country.”

Modern Singapore for better or worse has lived with a paranoid survivalist instinct. Is the unknown so terrifying? Can the future actually be brighter than the present? Look at the words in blue above again. Picture yourself in 1959 amid the chaos of a new government helmed by a young, inexperienced lawyer named Lee Kuan Yew.

Who said the words? Dr Goh Keng Swee. The exact words below in a speech in 1969:
“When my [PAP] government first assumed office on June 3rd 1959…..businessmen and industrialists, far from hailing this event as a happy augury for the future, felt for the most part that the end of the world was around the corner. The stock market collapsed and there was a flight of capital out of Singapore. Several people fled the country. [But] In a short space of ten years, we brought about a transformation of the business climate.”

Fear of Letting Go

It’s hard to let go of success- “If it ain’t broke, don’t fix it” is the common aphorism. In the behavioral sciences, loss aversion is well-documented to be more potent than gain, perhaps even twice as powerful. The man who loses $100 will lose more satisfaction than the man who finds $100. And it is hardest for successful organizations and countries to change. Bruce Henderson, the founder of the Boston Consulting Group remarked, “Success in the past always becomes enshrined in the present by the over-valuation of the policies and attitudes which accompanied that success.”

Success coupled with an inability to see that the environment has changed often spell disaster for companies and it isno different for political parties. Think moral hazard and co-payments. These concepts have served Singapore healthcare well these last 4 decades, but has our thinking about them ossified to the point that they impede rather than encourage innovative policy thinking? Rather than being useful policy compasses, have we distorted them so much that they become ideological blinkers?

I taught a class on ‘Cost Management in Healthcare’ last night. I used the example of Dell and how it has recently run into severe challenges, not least from its erstwhile supplier, Asus. Dell had a great business model but could not see or react quickly enough to changes in the computer industry. Two lesson I urged the students to take home: Deeply understand the driving forces in your industry/ sector AND as incumbent or market leader milking the ‘cash cow’, use your profits to be ready for the future (incidentally, the term ‘cash cow’ also came from the Boston Consulting Group and the consulting firm advised clients too that ‘cash cows’ eventually become ‘dogs’ at the end of the business cycle). In the policy arena, this translates into using parliamentary majorities, political capital etc. to push through reforms that in the short term may cost, but in the long term are necessary for party and country.

How do policy makers recognize the point when ‘cows’ are turning into ‘dogs’? After all, as Henderson continued, “… with time these attitudes become embedded in a system of beliefs, traditions, taboos, habits, customs, and inhibitions which constitute the distinctive culture of that firm… These characteristics are deep-seated and difficult to change. Frequently, this means that the organization becomes the prisoner of its own past success. … any effort to change them is quite likely to be viewed as an attack upon the organization itself.”

Hence, it is not surprising that debates about policy reform are emotive and passions run high. Dissenters are variously called ‘unpatriotic’, ‘naïve’ and ‘destructive’, and their ideas simplistically cast aside as ‘unworkable’ and ‘unsustainable’.

There does come eventually a dawn of realization where the incumbents painfully and reluctantly face up to the truth of a changed environment. This is a stuttering realization and ‘three steps forward, two steps back’ should not be surprising. Many time, this realization comes too late and organizations are consigned to the dustbin of history. Kodak, Polaroid, the Soviet Union come to mind. Ever heard of Digital Equipment Corporation? Maker of minicomputers, the precursor to personal computers, DEC had revenues of US$14.6 billion in 1996, but failed to realize the disruptive power of the PC and was overwhelmed by the likes of Hewlett-Packard. It was bought by Compaq (another company that today no longer exists) in 1998.

But if insight comes in time, dramatic turnarounds can happen. Another example from the fast moving IT industry. IBM was near collapse in 1993. Writing in ‘Who says Elephants can’t Dance?’, Lou Gerstner, who joined IBM as CEO to turn it around, vividly articulated the company culture: “there was a kind of hothouse quality to the place. It was like an isolated tropical ecosystem that had been cut off from the world for too long.” (my emphasis added)

Such insights come from infusion of ‘new blood’ (as IBM gained with Gerstner as it transformed into an ‘IT solutions’ company) or ‘old blood’ venturing out of its comfort zone with humility and willingness to learn. The Chinese Communist Party is a surprising example of this. Deng Xiaoping visited Singapore and other Asian nations in 1978. Seeing the immense progress from economic opening and development, Deng was reputed to have been so influenced that he returned to China his mind made up, and the wheels of transformation were set in motion.

Fear of Disapproval

This fear is pernicious as it rarely is confronted by the light of day. Public rhetoric is about ‘fundamental’, about ‘reform’ and ‘leaving no stone unturned’, but in truth, most reforms are really about arranging pieces within the same box, or at best expanding the boundaries of the said box. In the Lee Kuan Yew School of Public Policy is mounted a quote attributed to Albert Einstein

No problem can be solved by the same consciousness that created it

In many organizations, there is a tension between so-called hardliners or conservatives and reformists. Usually the hardliners are stewards of the original way, who have risen through the ranks and fervently believe in the status quo as the only correct path for the country. The reformists tend to be younger, lesser steeped in the culture of the organization but most crucially not enjoying the same standing, credibility and power as the hardliners. Can change be driven internally and odium transformed to approval?

There is an interesting video entitled “First Follower: Leadership Lessons from Dancing Guy”. In this video narrated by Derek Sivers, a Singapore-based entrepreneur, he describes how a dancing guy is followed by one person and then another and finally the dancing culminates in a movement. Siver enlightens: “Being a first follower is an under-appreciated form of leadership. The first follower transforms a lone nut into a leader. If the leader is the flint, the first follower is the spark that makes the fire. The 2nd follower is a turning point: it’s proof the first has done well. Now it’s not a lone nut, and it’s not two nuts. Three is a crowd and a crowd is news.”

What then for the reform-minded public servant? Find the first follower! And the second! And make it so public and so ‘normal’ that to not change would be abnormal.

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The fears of change are real and felt viscerally, but they can be overcome. The fears of ‘the unknown’, ‘letting go’ and ‘disapproval’ are very natural and understandable, but by understanding them, helping others to understand them and more importantly understanding how to overcome them, reform becomes just that little bit easier. Perhaps let me end with some encouraging words for those still fearful of losing everything. “Don’t be afraid to give up the good for the great”- Kenny Rogers.

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One comment

  1. […] Insights Health Associates: Policy Reform: The Fears of Change – Alex Lew Yan Liang 刘彦良: Minimum wage will not work for Singapore – Yours Truly […]

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