What's New in Cybertalk?

by Jean Gora
September 1999

Note: CyberTalk is a column that appears monthly in LOMA's Resource, the magazine for insurance and financial services management. To see more contents of the magazine and to see how to subscribe, click on Resource.

Intranet-Based Knowledge Management at Clarica

This month’s CyberTalk examines the knowledge management system of Clarica, formerly The Mutual Group. This system not only makes extensive use of Clarica’s corporate intranet; it also shows how the education of insurance company employees is beginning to change. (As a provider of educational services for such employees, LOMA is already taking steps to respond to such change. See sidebar, "LOMA Helps Upgrade Employee Knowledge Skills.")

Since its 1998 acquisition of MetLife’s Canadian subsidiary, Clarica has been the fourth largest Canadian insurer. It serves one in ten Canadians and offers life insurance, mutual funds, employee benefits, disability management, financial planning, mortgage loans, annuities, and pension plans. In Canada, it has 3,200 agents, financial planners, and group representatives that operate out of 100 offices. In the U.S., it serves 250,000 policyholders through independent agents and a staff of 300. Clarica was the first Canadian company to adopt the level commission system and has used it since 1989.

In July 1999, Clarica became the first of four Canadian insurers to demutualize in the current wave of Canadian demutualizations. It substituted the name Clarica for The Mutual Group in conjunction with its demutualization.

Clarica took many steps to prepare for demutualization. Top management realized that Clarica, as a public company, would receive far more scrutiny by outsiders than it had as a mutual organization. It would also come under intense pressure to demonstrate superior financial performance. Therefore, it put in place a series of computer systems and organizational practices designed to boost the company’s efficiency and effectiveness.

In 1996, Clarica introduced a corporate intranet (which uses a Domino server and Lotus Notes) and hired Hubert Saint-Onge as senior vice president of Strategic Capabilities. Mr. Saint-Onge already had a worldwide reputation in the area of knowledge management because of his activities at CIBC, a leading Canadian bank. At Clarica, he became responsible for the integration of the company’s business plans into its people management systems and its technology infrastructure. In 1997, Mr. Saint-Onge identified the company’s key strategic capabilities and initiated the company’s knowledge capital initiative.

Exploiting Knowledge Capital

In the view of Mr. Saint-Onge and his associates, a company has three kinds of knowledge capital: human capital, customer capital, and structural capital. The knowledge of a company’s employees and business partners represents its human capital. The loyalty of its customers represents its customer capital. Its business processes represent its structural capital. Together these three types of capital create a company’s knowledge capital. Companies that exploit their knowledge capital effectively should perform better in a changing market.

To exploit Clarica’s knowledge capital, Mr. Saint-Onge created what he called "Strategic Capabilities." Staff members from Clarica’s human resources department, renamed Membership Services, contributed expertise about individual capabilities. Staff members from Clarica’s business units contributed expertise about organizational capabilities. A Knowledge Team served as architects of a knowledge management infrastructure. The expertise of these three groups established the framework and plans for knowledge management and learning.

The knowledge team then began Clarica’s knowledge capital initiative, the purpose of which was to accelerate the generation of individual and organizational capabilities to take advantage of market opportunities by harnessing the technology infrastructure across the firm.

Its task was to build the explicit knowledge infrastructure of the firm. Such an infrastructure must enable the gathering of information, learning on the basis of that information, the transfer of that learning to all relevant areas of the firm, and action on the basis of that learning.

Creating A Knowledge Infrastructure

According to Bob Forrester, Clarica learning architect, and Joni Eitel, Clarica learning consultant, the company took the following steps to create that explicit infrastructure. It:

Built the electronic "railroad" on which knowledge can be exchanged seamlessly across the enterprise. The corporate intranet became such a railroad.

Gave the knowledge management team the mandate to coordinate the socio-technical dimensions of knowledge.

Built communities of practice by discipline (e.g., investment officers or actuaries), strategic theme (e.g., key individuals involved in planning demutualization), business teams (e.g., staff involved in a particular line of business such as group pensions), and project teams (e.g., staff involved in a particular project within a particular line of business). Clarica also has a customer community that includes the human resource directors of its major group clients.

Developed an architecture that would focus and link the flow of knowledge through the firm.

In the development process, Clarica identified two kinds of knowledge: knowledge as possession and knowledge as practice. Knowledge as possession can be codified and stored. It tends to be somewhat static. A successful company makes this knowledge easily accessible for retrieval from a central location by all individuals in the firm. Clarica decided to create a knowledge depot accessible via the corporate intranet. Knowledge as practice occurs in communities of practice. It tends to be interactive and dynamic. It results from productive inquiry.

The knowledge architecture creates a link between knowledge as possession and knowledge as practice. It does so by having a knowledge manager in each community of practice capture, codify, and store at the knowledge depot the best practices identified by that community. All employees can access information about these practices through the knowledge depot. Thus, employees both contribute their accumulated knowledge and draw on the knowledge accumulated by others. The result is a circle of knowledge creation and diffusion.

The knowledge depot represents a portal on the corporate intranet. It has four major components: a learning center, a knowledge map, a library, and a corporate directory of business practices.

The learning center is a one-stop shop that enables people to access learning opportunities (e.g., online courses and university programs) or directions to find them (e.g., books, Internet sites, communities of practice).

The knowledge map is a directory of expertise within the firm, the community or external consultants.

The library includes all reference documentation including manuals, team publications, governance documents, schedules and tables used for business processing, and tools.

The best practices section includes the corporately sanctioned procedures for high-level practices. These procedures are created and maintained by the appropriate community of practice.

Top management at Clarica believes it has already seen proof of the value of its knowledge management system. Three years before the company purchased MetLife’s Canadian operations, it had purchased those of Prudential U.K. Integration of the MetLife acquisition proceeded significantly more smoothly than that of Prudential. Clarica’s knowledge management system linked the two integration teams. It identified critical issues and created a forum where several perspectives could be considered at once. The result was quick, high-quality decisions.

LOMA Helps Upgrade Employee Knowledge Skills

Clarica has one of the most sophisticated insurance company knowledge management systems. However, it is far from being the only insurance company to look for ways to upgrade employee knowledge and skills rapidly as business conditions change. Insurance company employees find themselves pressed for time. LOMA is responding to this situation in a number of ways.

It is creating a series of short "quick study" guidebooks that average 75-100 pages in length. These guidebooks form the StepOne Series and cover everything from reinsurance and underwriting to long-term care, life and health insurance, and annuities.

By Fall 2000, LOMA will allow students of its first two FLMI courses (FLMI 280—Principles of Insurance: Life, Health, and Annuities and FLMI 290—Life and Health Insurance Company Operations) to take their exams under a modular approach. Under this new system, a student will have the option of taking one exam on the first half of the material in a course’s textbook and another exam on the second half of the material in the text. Students who do so will receive a grade for the course that is an average of their grades on the two exams. These students will not have to take a single exam on the entire course (although that option will still be available). This approach will allow students to take an FLMI course in smaller increments that can be mastered more easily by a student with a demanding work schedule. (Specific details on the grading process for modularized exams are still being worked out.)

LOMA is also taking advantage of the spread of the Internet to begin offering registration for and delivery of its exams over the Internet in late 1999. It is also planning to begin offering some LOMA courses over the Internet by mid-2000 or earlier.

LOMA has traditionally performed an important knowledge management function for the life insurance industry. LOMA’s committees represent communities of practice. Individuals throughout the insurance industry serve on these committees and contribute information on best practices. Information on these practices becomes available to insurance company employees through LOMA textbooks and courses, the LOMA information center, and LOMA research reports.

LOMA’s textbooks and courses are the result of extensive consultation with member company experts who contribute information about their companies’ practices. The textbooks themselves serve as a comprehensive and systematic record of these practices. Thousands of students around the world access this record when they take LOMA courses. LOMA is committed to making this record even more accessible through the Internet.