James Berkley
Why do most investor presentations reveal so little about the investment potential in insurance businesses and so much about management’s own fears?
If the objective is for the business to reach the “next level” (largely viewed in terms of financial performance) rather than to demonstrate capability or credibility, then management must first change their mindset. They need to develop different reference points and perspective about their business, their people, and the value they are providing to their customers. They can rarely grow profitably by doing more of the same thing that they are doing right now.
We celebrate the visionaries in the business: Pat Ryan, Bob Clements, Hank Greenberg, Warren Buffett. We might not “like” all of them but they garner our respect for their achievements and their ability to think big. Yet their accomplishments are a rarity amongst a surfeit of insurance businesses where a mentality of “paucity” rather than “wealth” pervades.
Look around the industry, at insurance carriers, reinsurers, brokers and MGAs. Ask which businesses fall into the “paucity” mentality or the “wealthy” one. Where is top management prone to spending excessive amounts of time saving cents or alternatively, investing dollars and continually reinventing their business proposition to dramatically improve their clients’ health and well being?
When I think about profitable growth and expansion and the implementation risks that have scuppered the best designed plans in businesses I have worked in or consulted to, a failure of leadership to think big in the formulation phase and to act big in the implementation phase has been at the heart of the problem. Management fails to invest at the appropriate time in “growth” businesses. The effectiveness of operating models is allowed to erode until a crisis hits. An increasing aversion arises on the frontline to taking prudent risks, to innovation, and to creating increased excitement and value for the customer. There’s an increasing reluctance to grow and develop people and travel budgets get cut at precisely the time the business needs to “double down” its marketing effort.
When I see “paucity thinking,” I see leaders who have lost confidence in their own talent and control of their future.
They are reliant on plaudits from their key constituents (customers, board members, institutional shareholders, and peers) to validate their firm’s growth plans and take action.
When I see the opposite thought process at play, I see leaders who are unabashedly willing to jump on the horse and shout “follow me.” They run their business with a telescope, not a microscope. They attract others who are excited about both the scale and quality of the future opportunity. They actively encourage colleagues to take prudent risk. They bounce back from failure because they have an inner belief in their knowledge and skills. Their validation comes from their “past” (accomplishments, learning, victories, and defeats) as well as their confidence about the future.,
Thinking big means that the mentality needs to be one of abundant opportunity, one based on having tremendous talent, an ability to create phenomenal outcomes for our clients and one where we believe we have a great opportunity to control our destiny.
You are right if you say, “hang on a minute, the reality is we don’t have the resources of a Pat Ryan or Hank Greenberg, nor have we hit the heights that their current or past businesses have.” However that shouldn’t stop you and your key people from maintaining a mindset that if they want to reach the next level they must think and act big. We must stop spending copious amounts of time fixing things, trying to save on incidental items, and start innovating and reinventing ourselves.
Take any of today’s big issues: convergent capital, growth alternatives in mature markets with excess capital, enterprise risk management, distribution alternatives, and technological advancement and predictive analytics. The next time you are at an executive or management meeting, ask yourself if the meeting objectives reflect a group that is thinking big and setting appropriately big priorities. Or is it one that is fearful of the future and full of self-doubt about their capabilities, and as a result is attempting baby steps and seeking reassurance from outside the group?
Do we encourage and support our colleagues to talk about goals that double the size of the firm or business unit, not simply “double-digit” growth? Do we ask, “what will it take to get from today’s position to the desired “future state” or do we merely demand to know how can we do more of what we are doing today? Does the meeting end with agreement on a pragmatic action plan that delineates how everyone can contribute to the objectives and goals, or does it end with a vague promise “to revisit the subject at a future date”?
Finally, is everyone clear about what action and behaviours must be undertaken to sustain excitement amongst colleagues and encourage them to try new growth paths and fresh ideas), while minimising the fear about the journey and what the future might mean for them personally? You’ll be surprised by the impact thinking and acting big can have on your’s and your clients’ businesses and how it can dramatically reduce the risk to the respective growth objectives and goals.
James Berkeley is founder and managing director of Ellice Consulting Ltd. He is a global expert in helping executives and organizations dramatically improve their operating performance in high-growth markets. Organizations he has worked with include Travelers, Zurich International Life Ins. Co., Hilton Worldwide, Ericsson AB, and Caesars Entertainment.
