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From Resource, December 2006
Copyright by LOMA
Achieving World-Class
Performance in the Insurance Industry
The
author lists seven steps he says will lead to sustainable performance.
By James M. Kerr
We have entered a new and exciting epoch in
the insurance industry. All of the characteristics that defined success in the
past do not guarantee success in the future. Convergence, consolidation and
technology have simply changed the game for evermore.
It’s important to consider
for a moment the far-reaching implications of these trends, including:
*large
may mean too slow to respond to market changes; low cost structures may not
easily translate into all post-merger settings;
*established
product sets can be replaced by non-industry entrants;
*domestic
advantages may not be strong enough to withstand the global reach of other
rivals;
*customers
are seeking different products and services than they had in the past, and;
*the
labor market is tighter than ever before.
The game sure certainly changed!
With that said, the insurance
companies that will dominate in the first half of the 21st century will be those
that are nimble and quick, interconnected and diverse, committed to service
delivery while location independent. The most successful ones will thrive in a
state of continuous transformation, ever changing to remain competitive.
How Do We Respond
How does a company position
itself to respond to the changes that the new era holds in store?
Insurance companies must begin to introduce new, and extend existing
programs, that focus on positioning the firms to be agile and swift, while still
growing and evolving into broad-reaching and highly profitable enterprises.
While certainly a tall order,
such change is within reach. Consider a world-class athlete for a moment. When
an athlete goes into a “slump” in their chosen sport, whether it’s a
baseball player who hasn’t had a hit in his last 25 at bats, or a figure
skater who can’t seem to nail a triple toe jump, their coaches immediately
help the athlete to focus on the fundamentals – reinforcing key aspects of
athletics like speed, quickness, strength and endurance. Once fundamentally
sound, the athlete can then concentrate on refining the finer skills that make
them world-class.
The same is true in business.
It’s the adoption of a “Back-To-Basics” philosophy that is needed. Indeed,
insurance companies must return to the basics in order to respond effectively to
the challenges that today’s competitive paradigm has in store. The question is
how?
Forging a New Tomorrow
Below is a seven step process
that every insurance company can put into motion to ensure lasting success.
Think of them as the Back-To-Basics for the industry. An insurance company that
adopts this approach will be better able to respond and adjust to ever changing
competitive demands than ones that do not.
The seven steps are as follows:
1.
Establish Program-Centric Strategic Planning – the process of defining the
work needed to achieve a firm’s vision and business objectives by identifying
the appropriate collection of projects and programs required to get there.
2.
Build Resilient IT Architecture Designs – the process of building an IT plan
comprised of initiatives that
provide a means to easily build, extend and redeploy information technology
seamlessly across an enterprise.
3.
Create a Results-Focused Communications Environment – the process of
establishing the necessary communications infrastructure, complete with the
standards, tools and practices required to ensure that appropriate communication
occurs within, and across, an organization and its stakeholders.
4.
Adopt Portfolio-Based Project Management Planning – the process of creating a
project-oriented management culture that manages a firm’s strategic
initiatives as a portfolio, much like a mutual fund manager manages a portfolio
of stocks.
5.
Embrace Uninterrupted Business Redesign – the process of constructing a work
environment that can accommodate a state of continual transformation and renewal
brought about through continual business reengineering.
6.
Assemble Cross-Cultural Workforce Inclusion Programs – the process needed to
introduce a corporate culture that celebrates the individual differences that
comprise an organization’s workforce and can leverage these differences to
competitive gain.
7.
Embark Upon Continuous Employee Improvement – the process of instituting
appropriate training and measurement procedures that enable staff to modify
behaviors and deliver the results needed to keep their enterprises vital and
flourishing.
Here’s how these seven steps fit into the
essential fundamentals that lead to ongoing success within the new epoch.
How They Fit Together
Tthese seven programs form an
interdependent set of activities that, when put into action, leads to
improvements in virtually every aspect of an enterprise.
For
example, let’s assume that the Program-Centric Strategic Planning effort leads
to defining, among other things, the initiatives needed to redefine and automate
service offerings. A Resilient IT Architecture Design will need to accommodate
the systems requirements that fall out of the service offering initiative. In
order to flourish, the redefined work processes will require the skills and
principles underpinning Uninterrupted Business Redesign. For the Uninterrupted
Business Redesign to work, Continuous Employee Improvement programs will need to
be put into place to prepare staff to be successful within the new business
model. Results-Focused Communications will be an essential element of staff
preparedness. Because the staff is diverse, Cross-Cultural Workforce Inclusion
efforts will kick-in, as well, to ensure no one is left behind. All of this work
will be organized into projects. These projects will be managed using
Portfolio-Based Project Management practices.
It is
easy to understand, through this illustration, how the seven programs interplay.
Now, let’s examine how an insurance company can make it happen.
Making It Happen
A new corporate program should
be staffed and funded as a means to overseeing the execution of the seven steps
outlined above. Typically, it requires three to six months of full-time work to
institute such a program. Companies should view the program as an ongoing
process, where each step continually evolves over time and adjust as dictated by
a company’s strategic direction.
With
that said, a program champion and project team should be identified that will be
responsible for overseeing the program and ensuring that all is done well.
Typically, the program champion is a senior executive involved in
direction-setting for the concern. He or she may even be the CEO or company
president. However, other members of the executive staff can guide the project,
as long as the designated champion is well respected by his / her peers.
The
full-time project team is responsible for overseeing the work and ensuring that
the seven steps comprising the program are properly executed. The basic
responsibilities of the team include:
Conducting monthly project coordination
meetings with the program champion;
Conducting quarterly executive
steering committee meetings;
Updating and publishing the
program status reports;
Communicating adjustments,
issues and changes to the stakeholder community;
Facilitating cross-project
sharing of information/solutions;
Identifying opportunities to
consolidate and reapply work efforts, where possible, and;
Assisting staff in the work
step execution.
Needless to say, the project team must
be staffed by competent and respected people. There is sometimes a tendency to
place “castoff” employees on these teams. Doing this sends the organization
down a slippery slope to failure. The management team must place individuals who
know the business, know the industry, possess strong communication skills and
are business savvy – all essential attributes for getting the job done.
Clearly,
the work necessary to institutionalize these seven steps touches the entire
organization – requiring active support and participation from across the
board. Insurance companies that embrace these begin the process of
transformation required for continued success within the industry. Nothing can
come along that a firm that, has done these well, can’t handle.
To Sum
The seven steps outlined above
are, indeed, basic. However, basic doesn’t mean easy to accomplish. It will
require hard work and commitment to weave these programs into the very fabric of
an institution. Nevertheless, if an insurance company can ready itself to do
these things excellently, then it will redefine the rules of competition. It
will dominate the markets that it competes in. It will possess dexterousness in
response, deftness in flexibility and prowess at being there (wherever
“there” is) before anyone else – and these newly redefined businesses will
be able to do all of this, while offering incredible products and services to a
discerning customer-base.
About The Author:
Mr. Kerr has worked in and
around the insurance industry for over 20 years. He has held executive positions
within AXA Financial and Mitsui Sumitomo and has provided consulting support to
many other firms within the industry. His latest book The Best Practices
Enterprise (J. Ross Publishing, 2006) focuses on the topics outlined here.
Contact him at jkerr@kerr-consulting-group.com.
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