Insurance: Creative Destruction?
4 min read
Creative Destruction is term that has been used to describe the disruptive and destructive effect innovative technology companies have had on their competition – Microsoft, Google, Facebook, Twitter, etc. headline this list. Now it is used to describe those firms at the cutting edge of Artificial Intelligence, Genomics, Machine Learning, Edge Computing, Robotics, Autonomous Vehicles (Elon Musk), 3D printing, and other technologies.
But what about insurance brokerage? Are there any WDC regional insurance brokers/agencies that are creatively destroying their adversaries (competitors) right now?
Absolutely. Without naming names, two of these firms are my clients. I will use them as a composite to describe what they have done in the past 18 months to their local competition. I will describe just two of the arrows used from their quiver to accomplish this destruction:
Decisive Engagement (Prioritize & Execute): I received a call from one of my C-Suite hiring authorities about a year ago. He explained that he was having trouble growing the top line of his revenue base as well as generating new business. He went on to describe how his sales department was demoralized because of a recent change in the sales commission structure and how no one was focused on opening new doors to drive new business.
He also explained to me in a boardroom presentation that his firm had been trying to fix this problem by launching a series of initiatives including: 1) setting up some new satellite offices, 2) revamping and relaunching their website, 3) replacing the agency management system with a new one, 4) reshuffling his account management staff, 5) re-branding the company, 6) bringing in some consultants to add metrics and benchmarks to the annual review process and teach leadership and cutting-edge management techniques.
After explaining to the hiring authority the concept of Decisive Engagement, he postponed the above initiatives in favor of throwing all his resources into solving his #1 problem: Sales.
Decisive Engagement is a military term used to describe how a ground force reacts to contact when involved in the chaos of an enemy attack: you prioritize and execute. First things first. You act with the end in sight which, of course, is to decisively defeat the enemy or extract to fight another day. If one tries to do too many things at once, you lose. People die. You prioritize the most critical warfighting functions and take it step by step.
The hiring authority fully bought in. He immediately understood and embraced the concept. He immediately set new sales as his #1 priority and delayed the rest until sales was fixed. And then he executed a new business plan with sales as the centerpiece.
Once he redirected his resources to sales, and communicated his renewed financial and resource commitment to the sales team, everything changed within a few weeks. The website and branding funds were redirected to new sales materials, call lists, lead generation, as well as incentives for developing Centers of Influence and actively participating in industry conferences. Management consultants were waved off. All other initiatives were postponed. After 90 days, the increase in sales was astounding.
The marketing department also launched a “Take-Away” campaign whereby the sales department targeted those accounts that they identified as being currently held by their top five competitors. These are ‘double-wins.’ You win, they lose.
In a few months new sales were once again on track. The other initiatives followed in the order of priority. This client cannot hire enough sales producers now to keep up with the referrals and account upselling and cross-selling. This firm is now crushing their mid-market local competition. And so it goes…the strong get stronger, and the weak get weaker.
Remote Work Environment: One of my favorite clients (yes, I have favorites) made a scary leap of faith nine months before COVID arrived in early 2020. After much consternation, I persuaded my insurance agency client to embrace remote work options for their senior account managers in order to get some A+ players on the team. The current team was very experienced, but innovation and proactivity were a distant memory to these folks. They were lethargic and simply not very good. Even they later admitted after being sacked, that 9AM Monday mornings were not something they looked forward to.
During the past several years, well before COVID, I had always been a big fan of remote options because candidate feedback consistently indicated that being able to work remotely was #1 on the list of wants and needs. Yes, folks, having the flexibility to work at home for a seasoned professional was a big motivator and differentiator back as early at 2017. Nobody would listen…what does a head hunter know, right?
This client made their first remote hire in mid 2019. The candidate lived in southern Virginia and they paid 50% of the DMV market rate for this individual. She was a star. They took the money saved and hired a second account manager from West Virginia. Another star. Then they hired producers from out of state. More account managers followed. More producers followed. Customer satisfaction soared. Sales skyrocketed.
COVID hit in early 2020.
By this time, this client had already transitioned to remote at home software, peer to peer collaborative platforms, and related security hardware in order to operate remotely, securely, and successfully. Turns out the clients didn’t care or even realize these account managers were working remotely. They were ahead of the curve by almost one year. This past year we made so many placements, I could hardly keep up with the invoicing.
Recently, they hired the three best and brightest employee benefits account managers along with a producer from their fiercest local competitor. We had taken four others from this same firm earlier in the year. As of two weeks ago, I heard the competitor is in dire straights having lost all their top staff. They are desperate. Morally, I cannot take any more of their people as they could very well go out of business. I would never wish that on anyone. This firm has repeatedly said, “NO” to anyone working remotely. As of last week: No change in policy. Damn.
Creative Destruction. Really? In insurance? You bet.