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PREDICTION & MANAGEMENT SYSTEMPREDICTION & MANAGEMENT SYSTEMSoftware package for Microsoft WindowsSoftware package for Microsoft Windows

R TM

This is a demonstration disk

Copyright 1998C

Peter M. Sandman LLC and QEST Consulting Engineers

For pricing or further information:For pricing or further information:

Email: Email: [email protected] [email protected]

Website: Website: www.emsoft.com www.emsoft.com

Telephone: 1 888 367 9580Telephone: 1 888 367 9580

Facsimile: 1 303 273 5070Facsimile: 1 303 273 5070






There are three parts to this demonstration...There are three parts to this demonstration...

• Controversies are no longer seen as “natural disasters.” You Controversies are no longer seen as “natural disasters.” You don't have to batten down and wait for the storm to pass any don't have to batten down and wait for the storm to pass any more.more.

• Controversies can be predicted, then averted or minimized.Controversies can be predicted, then averted or minimized.• Reputation management is part of normal “due diligence” Reputation management is part of normal “due diligence”

activities.activities.• It can be statistically demonstrated that we predict human It can be statistically demonstrated that we predict human

reactions more precisely than we predict safety, reactions more precisely than we predict safety, environmental and financial upsets. We calculate the environmental and financial upsets. We calculate the others… why not outrage?others… why not outrage?

$$Regulators get tougherRegulators get tougherNew permits are deniedNew permits are deniedBusiness opportunities are missedBusiness opportunities are missedRecruitment becomes difficultRecruitment becomes difficultMorale fallsMorale fallsProductivity fallsProductivity fallsShare price fallsShare price falls

Your company Your company does a good job of does a good job of running efficiently running efficiently and safely...and safely...

... but you forgot to ... but you forgot to manage the manage the outrage!outrage!

Faced with a typical risk controversy, first Faced with a typical risk controversy, first

make sure you’re right make sure you’re right technically. technically. Then since Then since

you are “right”:you are “right”:• Ignore your opponentsIgnore your opponents• Bury them in dataBury them in data• Attack their motivesAttack their motives• And when it’s all too late...And when it’s all too late...

Manage your technical problem... AndManage your technical problem... And

manage the manage the outrageoutrage too. too.

In other words...In other words...

• If you have a hazard problem, reduce the hazard.If you have a hazard problem, reduce the hazard.• If you have an outrage problem, reduce the outrage.If you have an outrage problem, reduce the outrage.

• Better yet: Better yet: Address the potential Address the potential for outrage….for outrage….

PREDICTION AND MANAGEMENT SYSTEMPREDICTION AND MANAGEMENT SYSTEM

Peter Sandman is famous for his formula,Peter Sandman is famous for his formula,““Risk = Hazard + Outrage.” Could Sandman’sRisk = Hazard + Outrage.” Could Sandman’sadvice to companies on how to manage outrageadvice to companies on how to manage outragebe captured in a system? The guru’s initialbe captured in a system? The guru’s initialreaction was “Interesting concept but reaction was “Interesting concept but NO WAY!NO WAY!””

A risk management consultancy thoughtA risk management consultancy thoughtotherwise and hired Sandman by the hour to adviseotherwise and hired Sandman by the hour to adviseon a pilot program. His assessment of the firston a pilot program. His assessment of the firstpilot: “AWFUL - but the concept will work....pilot: “AWFUL - but the concept will work....

Step 1

190Questions

Step 2

Answers &Formatting

Step 3

MathModelling

The Task......How to model a guru

Step 4

Explanations& Examples

Peter had to probe his decades of experiencePeter had to probe his decades of experience(and even some data!) more than he(and even some data!) more than hehad ever done before in order to rebuildhad ever done before in order to rebuildfrom fundamentals a suite of 190from fundamentals a suite of 190questions. The work was challenging butquestions. The work was challenging butafter a great deal of time, perspirationafter a great deal of time, perspirationand inspiration he delivered: the componentsand inspiration he delivered: the componentsof outrage in bite-size chunks.of outrage in bite-size chunks.

Step 1

190Questions

Step 1

190Questions

Step 2

Answers &Formatting

Step 3

MathModelling


Step 4


The next step was to draft answers - not just theThe next step was to draft answers - not just the““right” answers to each question, but also wrongright” answers to each question, but also wronganswers that captured the misjudgments Peter’sanswers that captured the misjudgments Peter’sclients tended to fall prey to. clients tended to fall prey to.

Then the questions had to be formatted and orderedThen the questions had to be formatted and orderedin a way that captured the complexity of the process.in a way that captured the complexity of the process.

Step 2

Answers &Formatting

Step 1

190Questions

Step 2

Answers &Formatting

Step 3

MathModelling


Step 4


Surely the work was complete now… or so we thought. WeSurely the work was complete now… or so we thought. Wewere wrong. Not all questions are equally important in scoringwere wrong. Not all questions are equally important in scoringan outrage factor, and not all outrage factors are equallyan outrage factor, and not all outrage factors are equallyimportant in making up a total “outrage score.”important in making up a total “outrage score.”

Having weighted the questions and factors, all that was leftHaving weighted the questions and factors, all that was leftto do was some simple arithmetic, right? Wrong. When weto do was some simple arithmetic, right? Wrong. When wetested our mathematical models on a range of cases, they didn’ttested our mathematical models on a range of cases, they didn’talways match Peter’s intuitions. He wasn’t about to change hisalways match Peter’s intuitions. He wasn’t about to change hisintuitions. So it was back to the drawing board for the model. intuitions. So it was back to the drawing board for the model. The weeks turned into months and the months felt like years,The weeks turned into months and the months felt like years,but we got there: A set of formulas that reliably replicated Peter’sbut we got there: A set of formulas that reliably replicated Peter’sintuitive outrage assessments. intuitive outrage assessments.

Step 3

MathModelling

Step 1

190Questions

Step 2

Answers &Formatting

Step 3

MathModelling


Step 4


An explanation...An explanation...

and an exampleand an example

Outrage Assessment

Outrage Management

IssuesDefinition

Stakeholder Analysis

The definition of the situation may seem both obviousThe definition of the situation may seem both obviousand unnecessary… it isn’t.and unnecessary… it isn’t.

For example, if you are about to put a new chemicalFor example, if you are about to put a new chemicalfactory in a fairly densely populated area it is veryfactory in a fairly densely populated area it is veryimportant to be clear whether you are assessing theimportant to be clear whether you are assessing theoutrage due to the announcement of the new plantoutrage due to the announcement of the new plant(probability of occurrence = 1) and having a major(probability of occurrence = 1) and having a majortoxic release (much smaller probability, highertoxic release (much smaller probability, higheroutrage).outrage).

Before we can assess the outrage, we need to determineBefore we can assess the outrage, we need to determinewho it is that might get upset. Historically, corporationswho it is that might get upset. Historically, corporationsdon’t do this well so Peter Sandman helps with a seriesdon’t do this well so Peter Sandman helps with a seriesof prompts like....of prompts like....

• Who’s given you problems before?Who’s given you problems before?• Who have you forgotten in the past?Who have you forgotten in the past?• Who lives over some physical or conceptual line?Who lives over some physical or conceptual line?• Who do you hate talking to most?Who do you hate talking to most?• Who may think they are a stakeholder even if theyWho may think they are a stakeholder even if they aren’t?aren’t?• Etc. Etc.Etc. Etc.

One of Peter’s many available prompts...One of Peter’s many available prompts...

Now that you’ve done the work in identifying potentialNow that you’ve done the work in identifying potentialoutrage subjects, Dr. Sandman offers you a proformaoutrage subjects, Dr. Sandman offers you a proformalist as a final check.list as a final check.

This is at the rear of the identification process just toThis is at the rear of the identification process just tomake sure that you are making issue specificmake sure that you are making issue specificdecisions and not “leaning” on the check list.decisions and not “leaning” on the check list.

It’s not enough for us to list the stakeholders, we needIt’s not enough for us to list the stakeholders, we needto identify the more important ones and build up ato identify the more important ones and build up acharacter profile of them.character profile of them.

• How well do we know them?How well do we know them?• How much power, passion do they have and how much do they stand to lose?• What drives them?


• How well do we know them?• How much stake, power and passion do they haveHow much stake, power and passion do they have and how much do they stand to lose?and how much do they stand to lose?• What drives them?


• How well do we know them?• How much power, passion do they have and how much do they stand to lose?• What drives them?What drives them?

Peter guides you through the main drivers.Peter guides you through the main drivers.

• If your stakeholder has great power but little passion If your stakeholder has great power but little passion it is often possible to acknowledge their power byit is often possible to acknowledge their power byoffering them something else that they want butoffering them something else that they want butwhich doesn’t cost your company so badly.which doesn’t cost your company so badly.

• If your stakeholder has lots of passion but littleIf your stakeholder has lots of passion but littlepower (be careful, power can sometimes be indirect)power (be careful, power can sometimes be indirect)then you can defeat them if you choose (assumingthen you can defeat them if you choose (assumingthere is no real hazard). Whilst this is a valid option,there is no real hazard). Whilst this is a valid option,be careful that you consider it’s effect on otherbe careful that you consider it’s effect on othercorporate issues before proceeding.corporate issues before proceeding.

• If they have power and passion, get ready to bend orIf they have power and passion, get ready to bend oryou might just break.you might just break.

Some strategy options are available..but make sure theySome strategy options are available..but make sure theydon’t exacerbate other issuesdon’t exacerbate other issues

This is the core of the system, where the essence ofThis is the core of the system, where the essence ofPeter Sandman is captured. This is where intuitionPeter Sandman is captured. This is where intuitionhas been melted down and reconstructed in 190has been melted down and reconstructed in 190carefully formulated questions on the twelve Sandmancarefully formulated questions on the twelve SandmanFactors.Factors.

How well did we succeed? Let’s say we deliveredHow well did we succeed? Let’s say we deliveredabout 70% to 80% of the man himselfabout 70% to 80% of the man himself

PLUSPLUSA level of repeatability and transparency that even A level of repeatability and transparency that even Dr. Sandman concedes he can’t match.Dr. Sandman concedes he can’t match.

Voluntary v Coerced

Natural v Industrial

Familiar v Exotic

Dreaded v Not Dreaded.

Chronic v Catastrophic

Knowable v Unknowable

Controlled by them v us

Fair v Unfair

Moral v Morally. Irrelevant

Trusted v Not trusted

Responsive v Unresponsive

11 Questions

6 Questions

11 Questions

20 Questions

11 Questions

22 Questions

11 Questions

51 Questions

21 Questions

15 Questions

25 Questions

23 Questions

Current

Antecedent

Space & Time

Of the SituationAttitude towardGovt. controlCommunity controlActivist control

Stakeholder control

FundamentalManagement

Honesty

Relationship building

Worst case

Other aspects OpennessAcknowledgment

Memorable v Not mem.

Question formats include: Simple multiple choice, ...Question formats include: Simple multiple choice, ...

ContinuousMonitoring ofperformance.Red is bad

drop down menus...drop down menus...

Thin lineindicatesless criticalfactor

And, “pick as many as apply”.And, “pick as many as apply”.

Green isgood. Wideline showsimportanceof factor

• Finished the questions?..Finished the questions?..– How well did we go?How well did we go?– Is this acceptable?Is this acceptable?– What are our main problems?What are our main problems?

This is a marginal risk. Not obviously unacceptable (red)This is a marginal risk. Not obviously unacceptable (red)or obviously insignificant (green).or obviously insignificant (green).

Peter’s BoundariesPeter’s Boundaries

• How well did we go?How well did we go?

Whilst Peter ranks the score as marginal, you may wish to Whilst Peter ranks the score as marginal, you may wish to apply tighter (or more loose) standards in your organization.apply tighter (or more loose) standards in your organization.((Some companies have harsh upper boundaries which call forSome companies have harsh upper boundaries which call forsite assessors to contact corporate affairs when in the Red site assessors to contact corporate affairs when in the Red ))

User’s BoundariesUser’s Boundaries(Note: see(Note: seehow the columnhow the columnhas turned redhas turned redeven though theeven though thescore hasn’tscore hasn’tchanged.)changed.)

500

300

• Is this acceptable?Is this acceptable?

• What are our main problems?What are our main problems?

Note that overallrating is marginalbut the honestycomponent needs serious attention

If we help you confirm that you have an outrageIf we help you confirm that you have an outrageproblem and then walk away… you may well beproblem and then walk away… you may well beOUTRAGED.OUTRAGED.

On the other hand, we can’t tell you specifically whatOn the other hand, we can’t tell you specifically whatto do in an individual situation to lower outrage, if weto do in an individual situation to lower outrage, if wedid you’d (correctly) call us charlatans or fools. did you’d (correctly) call us charlatans or fools.

Our approach to helping you manage outrage is to letOur approach to helping you manage outrage is to letyou know where your most damaging characteristicsyou know where your most damaging characteristicsare and help you experiment with different levels ofare and help you experiment with different levels ofchange so that you can decide the cost effectivechange so that you can decide the cost effectivesolution that can work within your organization........solution that can work within your organization........

The first thing the program does is ask two questions:The first thing the program does is ask two questions:

• Which answers hurt us most?Which answers hurt us most?

• Can we do anything about it?Can we do anything about it?

From the answers it receives from the data you’veFrom the answers it receives from the data you’vealready provided, the software will highlight the already provided, the software will highlight the questions to you starting with the most damagingquestions to you starting with the most damagingfactor...factor...

“Targets”identify theproblemquestions

A simulated“improvement”will be reportedin red text.

We monitor theoutrage fallingas we considerpotentialimprovements.

Now let’s review the options for outrage management:Now let’s review the options for outrage management:

Jean’s recommendations cost $100,000 to implement whereas Jean’s recommendations cost $100,000 to implement whereas the comprehensive solution cost nearly $500,000. The the comprehensive solution cost nearly $500,000. The estimatedestimated improvement for the additional $400,000 is simply improvement for the additional $400,000 is simplynot enough to justify the additional expenditure. not enough to justify the additional expenditure.

Base CaseBase Case JeanJeanComprehensiveComprehensive

We can drift through the individual factors to show the differentWe can drift through the individual factors to show the differenteffects of our changes. Lack of a responsive process was our effects of our changes. Lack of a responsive process was our worst factor and yet Jean didn’t fully address this because sheworst factor and yet Jean didn’t fully address this because shesaw difficulties in implementing the change in her company.saw difficulties in implementing the change in her company.

BaseJean

Comprehensive

• The “OUTRAGE” report will allow you to:The “OUTRAGE” report will allow you to:– Prioritize actionsPrioritize actions– Integrate with other risk management Integrate with other risk management

processesprocesses– Make results accessible and understandable Make results accessible and understandable

to operational and financial management to operational and financial management – Let them see that it is transparent, repeatable Let them see that it is transparent, repeatable

and non-threateningand non-threatening

This is a demonstration disk

Copyright 1998C

Peter M. Sandman LLC and QEST Consulting Engineers











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