Stephen Conwill

Q: How did you first come to work at Milliman?

It was a very lucky sequence of accidents. I’d known Steve Schreiber, who’s now an equity principal in the New York office, for several years, and he knew I was very interested in international travel. He learned that Milliman was trying to develop a consulting practice in Japan and needed some help. This was back before e-mail, so he actually sent me a snail mail letter saying, “We’ve got this opportunity to build a practice in Japan. Are you interested?” I picked up the phone—the most sophisticated technology available at the time—and said, “Yes, very definitely,” and I ended up joining Milliman. I started out in Seattle and shortly thereafter headed over to Japan.

Q: Had you ever traveled to Japan or Asia before?

No. I had traveled pretty extensively in Europe but had never been to Asia. But a good friend from college spent a couple years in Japan right after college studying karate, so I had become somewhat familiar with things Japanese. But if Allan Affleck, the founder of our Japan practice, had been developing a practice in some other non-U.S. location, such as Hong Kong or Portugal, I probably would have gone there instead.

Q: So you helped opened the Japan practice, and then you worked for Milliman in Tokyo for a long time. What happened when you returned to the United States?

When I came back to the U.S. from Japan, I resigned as a Milliman equity principal; but I actually never left Milliman. I was off the radar for a couple years, doing research and writing, and only occasionally in touch. But technically I was at Milliman all that time. You might say I was on a sabbatical.

Q: Is that very typical?

I know at least two other Milliman equity principals who took extended periods off during their careers to pursue personal interests or family interests. One of them hired me. I’d be surprised if other companies were as flexible as Milliman is in that regard. All companies say, “Our source of value is our people,” but Milliman is really flexible in letting people pursue what they need to pursue, even if that’s time off to learn something new, recharge batteries, or whatever.

Q: You now own and manage a vineyard and you also work as the director of research at Milliman. Are those two things intertwined in a business sense for you?

Maybe in two ways. First, the opportunity to be here in rural Oregon and have a view of the vineyard outside my office window is definitely an atmosphere conducive to thinking and planning and visualizing what we’re doing in research. It’s certainly an interesting environment, and it’s made possible only through modern technology, allowing me to stay in touch with people in this somewhat isolated area.

The second aspect is a little different. I’m currently working with Neil Cantle in Milliman’s London practice on some concepts from biology—DNA, evolution—in risk management. It’s a way of thinking about organizations as if they were biological entities. So a lot of ideas from biology ultimately have interesting applications in risk management. And believe it or not, you actually see a lot of the same ideas in vineyard management and in farming. Whether it’s the concepts of organic or biodynamic farming, which had been viewed as kind of off to the edge of mainstream farming, but are now coming into the mainstream, or just the whole idea of the farm as a living system, an awful lot of interdependencies exist. Understanding how to make such a system viable and vital is actually quite similar to understanding how to make an organization of people vital and viable. A lot of the techniques that are being developed now in risk management originally came from physics and dynamic systems. There is one large class of problems that manifests itself in physics and biology, and in finance.

Q: Are these ideas something that might influence Milliman’s CRisALIS project?

Yes. The concept of incorporating DNA, or doing analysis of risk through looking at the DNA of an organization is something that Neil is developing as part of the CRisALIS system.

Q: Do you think the idea of an organization as a biological entity applies to Milliman?

Definitely, and Neil and I and others have actually talked about applying some of these risk management techniques to better understand Milliman. From a risk management perspective, Milliman is a dynamic and low-risk organization. We are highly decentralized and empower all the local offices and local practices; and yet we have enough interconnections between the various practices to make us vital and give us scale. I think if you look at Milliman’s structure, you’ll find we’re pretty ideally suited from a risk management perspective.

Milliman has aspects of a “small world” structure in which you have a lot of clusters of cultures and towns, villages, and so forth that are vital on their own, but have enough interconnectivity that you can get from one place in the world to another place in the world with just a few steps. I think that’s a pretty good structure for a corporation to be organized around.

Q: Did you appreciate the uniqueness of Milliman’s structure right away, when you first started working here?

It probably took four or five years to fully appreciate it. In the course of developing the practice in Japan, I really became aware of how the organization and its flexibility work. In Japan there were at first just two or three of us, and yet we needed to perform very large projects in a wide variety of areas. The ability to call back to Seattle or Chicago or New York, or sometimes over to London, well, that process works exceptionally well. This efficient cobbling together of diverse resources works exceptionally well at Milliman.

Q: The Milliman culture and structure is quite unique in the United States. Is it fairly radical from the Japanese perspective?

It is radical in a sense, but Japanese companies do not operate on a top-down model. The ideas definitely percolate up from the far reaches of an organization in Japan. In that respect there is some commonality. In some sense, the senior people in a Japanese company are there to be mentors and to provide guidance, but they’re really not top-down managers. The management of a project, whether it’s the development of a new insurance product or a new car, happens in a fairly decentralized way. I think there’s probably more commonality than you might expect.

Q: You spent a long time in Japan and you obviously have a lot of affection for the country and its people. Do you miss it?

Yes, certainly I miss it. I miss the totality of the experience of living and working in Japan, and having kids grow up in Japan, and interacting with the Milliman employees there.

Q: As director of research for Milliman’s Life Insurance and Financial Services practice, what is the most significant outcome of the work you do? What are your goals?

The one fundamental goal of research—keeping in mind that we’re consultants and need to sell our services—is to do something that’s exciting and innovative and is likely to bring Milliman into new areas that are consistent with our expertise and capabilities. Above all, we need to make sure that we’re competing with ourselves to be creative and innovative, because we always have a few areas where we’re so far ahead of the competition that we’re really not competing with anyone else. That’s one goal of research.

Another goal, which is quite indirect and qualitative, relates to the fact that research projects often involve either multiple offices or new practices. We are always encouraging Milliman consultants across disparate practices to work with each other and get to know each other, and to collaborate and contribute ideas. That is a somewhat indirect but very important result of the research process.

Q: How does that work?

Most of the project work is done by e-mail or phone. But we do get together in the same place from time to time. For example, the Life Consultants Forum is just a great opportunity to get people who have been working together for the past six months into one room, and you suddenly find that there’s a really dynamic exchange of ideas. Regardless of the technology we have, there’s a fantastic efficiency of actually being in the same room together.

I’ve always found Milliman to be exceptionally successful in getting the most out of meetings. Our meetings are well planned, well organized, and well implemented, especially for someone like me, who was off in Tokyo and had the potential to be isolated over there. The meetings were just a fantastic place to get to know more people and keep in touch.

Q: In a recent video interview, you said that, “There’s something about Milliman that allows people to pursue things that are interesting that aren’t necessarily drawn out in the business plan.” What do you think accounts for this freedom?

Ultimately, the freedom is something that’s embedded in the culture. It existed back in the 1950s when we were getting started and it’s really been passed along. Milliman has its corporate goals, and the corporate goals relate to being financially successful and financially solvent, and also to maintaining a very high-quality work product. But beyond that, the business plans are left to the individuals. The firm truly empowers the local practices, and I think this both forces and motivates us to develop focused and innovative ideas.

Q: You’ve described Milliman as an “idea factory.” Could you elaborate on that?

If you look at successful practices, you’ll find that they are based on finding a couple of ideas that really drive their business. An obvious example is the Financial Risk Management practice. Their idea was to combine the technology of mathematical finance with incredible computing power to develop viable hedging strategies and risk management strategies for companies. That’s a fairly simple idea to state, but a very hard one to execute, and they’ve done an extraordinary job of making it happen. The Chicago Mergers and Acquisitions practice was essentially built around Bruce Winterhof’s idea that we were going to be the best and most responsive firm in mergers and acquisitions, that we would be available 24/7. If an investment banker wants to call me at 3:00 in the morning, I’ll be there to answer his question. That attitude has really driven the success of the Mergers and Acquisitions practice.

Q: Could you tell us about one of the most exciting ideas or concepts that you’re currently working on?

One idea I’ve been working on is agent-based modeling. It’s really exciting, because it’s essentially building models from the ground up that help us understand macro behavior from the interactions of the micro parts. Traditionally, the field of economics has been divided into microeconomics and macroeconomics. In theory, macro should just be the result of the emerging behavior of the collective micro parts, but economists have never really been able to link those two. Now, with computing power, it’s going to happen. And in the process we’re going to find some very interesting ideas that will help us in corporate management and in consulting. But we’re also going to show that a lot of the macro assumptions were simply wrong.

Q: Has the hi-tech revolution been a theme in your career?

It has. In a sense, the letter example I gave earlier is a good one, because if I were to point to one technological innovation that really facilitated the development of the practice in Japan, it was e-mail and the ability to send large volumes of data and have it transmitted almost instantaneously. That technology only existed from the mid-1990s on and Milliman was very fast to adapt that into our consulting ethic and our mode of operation. We’d be working on projects in Tokyo collaboratively with Seattle or Chicago or New York, and would literally be working 24 hours a day. A Japanese client would ask us to do a simulation that typically might be a two- or three-day project, and we would turn it around almost overnight. That increase in efficiency was really vital to our success.

Q: Would you mind sharing a Japanese phrase with us?

"Watakushi no tame ni, Milliman wa, totemo ii kaisha desu"—that translates into something like, "From my perspective, Milliman is a really great company."