The Guru Is In
The Problem with Experts
By David A. Smith
5 min read
The Schleswig-Holstein question is so complicated, only three men in Europe have ever understood it. One was Prince Albert, who is dead. The second was a German professor who became mad. I am the third … and I have forgotten all about it.
– Lord Palmerston (Prime Minister, 1855-65)
I’m an expert – and I’m part of a problem with our industry.
Experts are inescapable. The rising complexity of business and society, an irreversible byproduct of computing power and ubiquitous connectivity, mean that ever more interactions among people, government, and money are governed by persnickety rules that make experts inescapable:
- You’re confronting a future intense event.
- It’s huge and critical to you.
- You’ve never done it before.
- It involves a multi-step and protracted process.
- Your cares span many dimensions: cost, risk/pain, reward type, reward amount.
- You will pay costs to start it, then more costs along the way.
- Results are highly uncertain.
- Your outcome depends on choices you make along the way.
- Often it’s one-and-done – no rehearsals, no mulligans.
- Once started, it’s hard or worse to reverse.
Ordering the $500 magnum at your in-laws’ wedding anniversary dinner. Visiting the doctor about that unmentionable rash. Hiking through the bush to spot a leopard. Hiring a contractor for that dream new home kitchen. Investigating that rusty background standpipe which just might be the periscope of a leaking underground storage tank. Presenting at the NIMBY-packed public hearing for your Section 202 acquisition-rehab. Buying out your Year-15 investors. For all these, you’re plagued with what Microsoft once dubbed FUD (Fear, Uncertainty, and Doubt) and you always find a way to defer acting. Worse than paralyzed, you’re anxious.
You need an expert, but you can’t judge the expert’s expertise. Enter the sommelier with tastevin dangling on a silver chain; dermatologist with framed diplomas from Yale and Johns Hopkins; or – the Bantu guide with a gleaming teeth, earth-toned khaki, and a shoulder-slung carbine; or the affordable housing guru. You ask a halting question, wincing at your mangled phraseology. The expert promptly replies with a mixture of words you understand and acronyms you don’t, suffused with an aura of confidence: I do this every day.
You can’t choose based on performance, so you choose based on proxies. Though you want to fling your trust upon me, you know you’re unqualified to evaluate my qualifications, so you fall back on proxies. My diploma: snooty. My firm: large. My age: old. My manner: serene. My vocabulary: polysyllabic and technical. My professional certifications: an exclusive guild. My awards: framed and impressive-sounding. My office: filled with high-tech machinery and higher-tech staff scurrying earnestly about. My testimonials: celebrities and aristocrats. My fees: high.
Come again – high fees are a mark of confidence?
Paying more, you see, can validate your choice. By the time you reach the event itself, or even the crucial decision inflection point, you’ve long since passed the point of no return. Based on my advice, you’ve made choices that have closed off other choices; you can’t stop and you can’t back up. Changing horses in midstream is risky, and you’re no more likely to pick a better next expert than the first expert. Realizing that you’re going to be caught by path dependency, you pay up at the start, buying the priciest self-esteem insurance.
Government programs create the necessity for more experts. Affordable housing exists as a tangible expression of government policy resources (laws, money) fashioned into programs. The people who create these new or amended program rules are often professional experts in their field, so the rules they write presume that program participants will likewise be professionals. This unconscious assumption creates an immense tacit barrier to entry: newcomers cannot possibly compete unless they hire professional experts for each and every transaction element. Even better (from my perspective as a guru, that is), as program complexity accretes, the total expertise needed becomes additive; the experts-per-deal rises along with the professional fees as a percentage of the total spend. New rules mean new work for the likes of me – what fun!
With multiple missions, as in affordable housing, even more experts are required. As affordable housing adds multiple ancillary missions to the core proposition – vulnerable populations, green improvements, community additionality benefits – each new ancillary mission brings the developer into contact with new agencies, each of which thinks it, and it alone, reigns supreme over all other government agencies. Within each agency are further fiefdoms staffed with people who exist administratively solely to head off or stamp out problems that they alone can spot. To neutralize these guardians of subparagraphs, you must hire your own citation gladiator – another expert – for trial by combat.
In our quest to eradicate the haunting fear that someone, somewhere, is doing something not explicitly allowed in the rules, we have created a rules thicket where all these experts may possibly cancel each other out, leaving only a residue of additional soft costs paid by each and every year.
I’m an expert – and I’d like to be put out of the business of creatively contorting around arcane obstacles. For that I need elected and appointed officials who put as much energy into streamlining processes and removing old rules as many now do in inventing new ones.
