Executive Q&A: Stephen A. White President/CEO, Milliman

| FROM THE PRINT EDITION |
 
 

YOUTH: I was born in Oregon but came to Seattle when I was 4. My dad was the city manager of Mountlake Terrace for over 25 years. I was the numbers guy in the family. I went to O’Dea High School, then the University of Notre Dame, where I was a walk-on on the football team. I got to play a few games. I majored in math and joined Milliman right after graduation.

ACTUARIES: The actuarial profession really interests me, with its combination of business and math. What we do is put a present value on liabilities with uncertain futures. It’s like accounting with a futures bent to it. In accounting, you’re saying where things are today; the actuary tells you what a retirement plan or a life insurance policy is going to cost in the future. If a company changes the deductible in a health plan, for example, how much is that going to cost?

CAREER: When I joined Milliman in 1985, it had maybe 1,300 employees, about half of what we have today. After a couple of years working in Idaho in-house for Boise Cascade on its pensions and other actuarial needs, I returned to Seattle and got involved in management. I became a principal in 1993 and an equity partner in 1997. I worked with union funds jointly trusteed by labor and management. I also managed pension plans in which we evaluated the liabilities but also took over the administration with a call center and website for participants.

MILLIMAN: In terms of revenue, we are among the top three or four [actuarial firms] in the country. We have four business areas. We are probably second or third in the country in property-casualty, sixth in pensions, and first in life insurance and health consulting, where we work with hospitals and clinics on the best practices to deliver care. We have some of the best claims data available on cost experience for different claim types.

CULTURE: Milliman [founded by Wendell Milliman] first opened in 1947. When they added other offices in new locations, they decided to let those offices have control over their own destiny, with a separate profit structure. Even today, each practice elects its own equity partners, who share the profits of that office. One office might be quite a bit more profitable than another and the range of income for equity partners is also quite wide, but everyone is OK with that. That’s part of our culture.

TALENT: We attract people who are talented and want to have control and want to work hard and reap the benefits. That culture kind of feeds itself because the people who like the structure tend to be ambitious people who keep it going. We are very much into quality control with our work. We have a detailed peer review process in terms of who gets to be an equity partner, who has the authority to assign work. We also do a lot of collaboration on technology investments. IT and legal work are very much centralized and organized.

MARKET POTENTIAL: Our job is to help clients manage risk, and risk isn’t going away. The financial market is one area where there’s been a lot more volatility. That affects pensions and it affects life insurance in a big way since a lot of them have annuity products with minimum guarantees. Low interest rates are also a real struggle for those companies that have to provide those minimum guarantees over the long term. Our Chicago office works with many of the large insurance companies to provide hedging so that if the equity markets go down, the hedges can provide a backstop. That’s been quite successful. It really helps insurance companies take a lot of the risk out of the products they are offering.

INTERNATIONAL: This is another area that has accelerated, primarily in the insurance market. Big companies like Met Life and Munich Re are global and they are looking for expertise from a single company that can offer it across broad international markets. Right now, we have 55 offices and about half of them are outside the United States—maybe a dozen in Europe, a couple in Latin America, a couple in the Middle East and four or five in the Far East. We don’t expect to add a lot of new offices internationally, but we do expect each office to grow quite a bit. In Europe, regulators have added new, complex requirements for companies to prove their solvency. You have to do a lot of simulations: What happens in this or that situation? That has created more opportunities for actuarial firms.

COMPETITIVE ADVANTAGE: Our culture attracts more than its share of the high-level people. Another important advantage is the IT expertise we’ve developed over the past 15 to 20 years. Technology has become a big part of what we do. We have several hundred people in IT. A lot of it is based in Seattle because of the talent here. We developed a system that allows our insurance customers to do very intensive actuarial computations in the cloud. We were recognized by Microsoft as one of its technical partners of the year for that project. The group in Chicago doing the hedging work is also very IT focused. On the property-casualty side, we’re using IT to handle analytics prior to underwriting insurance. If you put in information like how old the house is, how far it is from the coast and what the zip code is it, the analytic tools can do more detailed calculations about the risks involved.

THE FUTURE: We’ve typically grown our revenues about 10 percent a year. We have a map for what we have to do differently as we become a $1 billion company in the coming years. Most of that growth will be organic. The CEO role at Milliman is not a traditional CEO role. Most of the strategy comes up from the individual practice areas. My job is to make sure we have quality people, maintain the culture and protect the brand—the reputation and the long history of quality. That’s a delicate advantage and we have to work hard to keep it.

SEATTLE: At the headquarters office in [downtown] Seattle, we have 400 to 500 people, including about 80 people who are focused on providing finance, taxes, legal, marketing and IT services for the whole firm. But we want to maintain our decentralized structure. It reduces bureaucracy and allows for more autonomy and flexibility. An expert on professional services firms brought in 20 years ago told us that while our growth was impressive, it couldn’t last with our decentralized structure and that we would have to change as we got bigger. They were wrong. We’ve still very decentralized and we’ve grown five times since then. But we do have to find ways to encourage more collaboration between offices.

Executive Q+A: Cougar Goals

Executive Q+A: Cougar Goals

The dean of WSU’s Carson College of Business is intent on creating new undergraduate opportunities.
| FROM THE PRINT EDITION |
 
 
 
Larry W. “Chip” Hunter, a scholar of human resource management and industrial relations, became dean of Washington State University’s Carson College of Business in March 2015. He aims to make Carson College the premier place in the Northwest for an undergraduate business education.
 
EARLY YEARS: I was born in Kansas, lived in Minnesota during grade school and moved west to Moscow, Idaho, when I was 12. My father was an administrator at the University of Idaho. My mother opened a children’s clothing store. My first paying job was washing dishes at Allino’s Hoagie Shop in Moscow. The place has been remodeled and is now called Gambino’s and is owned by Nancy Swanger, the director of our School for Hospitality Business Management! 
 
WHY BUSINESS: I was curious about workplace conditions and how money creates opportunity. As a professor, I began to wonder if we could get students thinking about how they, as managers and leaders, can create opportunities for others.
 
EDUCATION: I got my master’s at Oxford University, where I worked for legendary professors of economics, politics and philosophy. I also learned to play cricket. While working on my doctorate at MIT, advisers encouraged me to get out from behind my desk and understand the world, focusing on questions that matter. 
 
U.S. BUSINESS EDUCATION: We are very good at training students in technical business skills, and by encouraging them to take courses in liberal arts and sciences, we help them develop critical thinking and communication skills. At research universities, professors also do research and inspire rigorous ways of thinking about problems. That said, we don’t always do the best job of training students to translate their technical skills and abstract thinking into defining and solving real problems. We also don’t do a good job of teaching them to confront their mistakes and learn from failure. 
 
CARSON COLLEGE: Employers want students who have all the required technical skills in things like finance and accounting and who are analytical, but they also want students who can communicate, collaborate, take initiative and be entrepreneurial. There isn’t enough time to teach all that separately, so one idea is to infuse a lot of that thinking into existing courses. Accounting students, for example, might use online “adaptive learning” technology to learn technical skills, but then work in groups in class explaining the concepts to each other and working on issues they don’t understand. That encourages collaboration. We have a task force looking at these kinds of approaches and how to diffuse it into the faculty. 
 
WORKFORCE READINESS: We need students with strong entry-level skills, but we also need to shape their ability to learn. One approach is to work closely with employers to structure great internship opportunities, and encourage students to engage in global experiences, networking events and business-plan competitions. The best predictor of getting a job is having an internship. All studentst should have an internship as part of their education. 
 
PULLMAN: Having our main campus in Pullman can make it difficult to bring in experts and attract a diverse group of students. But we are creating diverse campuses across the state. Our Tri-Cities campus has a deep expertise in wine business management, our Everett campus works with experts in senior living management, and in Vancouver, our students do hands-on consulting with a local business in their senior year. We’d love to work with alumni to raise a fund to invest in innovative ways of teaching business.  
 
ONLINE EDUCATION: We are learning more and more about how to work in the online environment. I’d like to use more “adaptive learning” technologies to guide students through their more technically oriented courses, identify areas they have trouble with, and have facilitators and instructors there to help students get through challenging bits. 
 
DEVELOPING LEADERSHIP: There’s interesting recent work that shows introverts and extroverts are equally likely to be effective leaders. Self-awareness is a common theme among successful leaders. How do you play to your strengths? How do you compensate for your weaknesses? And how do you discover what those strengths and weaknesses are? Many leaders are really good listeners who know how to strike the balance between listening and acquiring information and not waiting too long to make a decision.
 
FIVE-YEAR GOALS: We want to make our online programs the best in the Northwest for the price. We also want to provide a lot more business education to non-business students, including courses in financial literacy so they know what to ask if they’re buying insurance or taking out a loan. When I was [associate dean] at the University of Wisconsin-Madison, we offered a one-week immersion course in entrepreneurship for scientists.
 
TEN-YEAR GOALS: To be among the top 25 public undergraduate business programs in the country — the first place students choose for an undergraduate business education in the Northwest. We also want to become the place that the business and policy community goes to for critical thinking about the Northwest. 
 

TAKE 5
Get to Know Chip Hunter

  1. DIVERSIONS: “I’m a trivia nut and went on Jeopardy! in the ’90s. I lost.”
  2. BOOK SHELF: “David Allen’s Getting Things Done is a great guide to personal productivity and effectiveness at work. Between the World and Me [by Ta-Nehisi Coates] is a deeply moving book about the reality of black experience in America. I just started reading Doris Kearns Goodwin’s Team of Rivals.” 
  3. FAVORITE DRIVE: “From Seattle to Pullman, with its changing geography, over the Cascades, into the high desert, and then finally into the Palouse.” 
  4. ADMIRED LEADER: “I am in awe of Lincoln — an amazing combination of steel spine and flexibility in approaching problems, of deep unwavering principles combined with pragmatism.” 
  5. DREAM VACATION: “A golf trip to St. Andrews, Scotland, with a group of my buddies.”

EXECUTIVE Q+A RESPONSES HAVE BEEN EDITED AND CONDENSED.