Is 10% All It Takes for North Carolina Workers’ Compensation to Change?

February 17, 2012, by Michael A. DeMayo

The behemoth that is the North Carolina workers’ compensation system seems like a tough beast to tame.

We want to smooth out inequities, give employers breaks, enhance trust among insurers, employers and employees, and, most critically, help employees receive a fair piece of the “grand bargain”. It all sounds like a lot of work. And it might be.

But intriguing scientific research suggests that complex systems – such as the North Carolina workers’ compensation system – can be powerfully shaped and molded with “nudges” as opposed to “sledgehammer blows.”

Let’s unpack that for a second. When you think about large systems – systems involving 100s of millions of dollars, thousands of people and employees and insurance companies – we intuitively believe that, to create change, we need lots of top down power. For instance, we need massive top down legislation. We need a huge influx of cash. We need rate cuts. Or rate hikes, depending on your point of view.

While using a sledgehammer can sometimes get the job done, sledgehammer blows are problematic for a few reasons:

1. They require massive amounts of energy and resources, so you can only fire off a very few;

2. Calibrating sledgehammer blows is very difficult. For instance, say you’ve got a gangrenous arm. A doctor saw off your arm at the shoulder to save you. You’ve cured the gangrene, but you’ve done it in a very sloppy way. The gangrene is gone, but we have no idea why it grew in the first place or what we can do in the future to fix/prevent it. We burn through a lot of our resources needlessly.

3. Hard to replicate. A hammer blow can work one time for one type of problem. But what happens when another problem emerges (and problems always do emerge)?

An Alternative to the Hammer Blow – The Chisel Or The Nudge

Another way to change complex systems is far less cost and energy intensive.

The other paradigm involves using nudges or slight changes in pressure and perspective, applied over extended periods of time. For instance, here is a good metaphor to illustrate the power of nudging. It’s easy to give someone a bruise on his arm by punching him on his arm hard. It is also, however, possible to cause a bruise by putting slight but constant pressure on the arm for an extended period of time. You know how much it hurts if you sit in a chair in the same exact position for too long. The point is: we can nudge easily, without investing a lot of time and energy. We can also run far more experiments to try to nudge the system in the right direction.

Whereas we can only maybe fire one or two or three cannonballs a year at our North Carolina workers’ compensation problem; we can try hundreds of different nudges to get the system to come into line with our values and vision and expectations.

Master business theoretician Jim Collins discusses this kind of resourceful thinking in his recent bestseller, Great by Choice. Collins argues that enduring systems (be they giant companies or institutions like North Carolina’s workers’ compensation) can be shaped and molded most effectively through a process that he calls “Fire Bullets, then Cannonballs.” In other words, conduct small little experiments and try to reach your goals (bullets). Once you are able to “connect” with the bullets, then you fire a cannonball after the bullets to get a massive effect.

This approach doesn’t guarantee success, but it makes success much more likely.

More Web Resources:

Fire bullet, then cannonballs

Small Shift Yields Massive Results Over Time


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