Summary
* We are likely to see some growers and several companies become "the once were" through industry M&A in the next 3-18 months. * Ernst & Young identified some excellent challenges. * The primary determinants for success will be; Execution-Excellence (Ex-Ex) and Executive Stewardship. * Every "bell-curve organization" (average performer) risks being consumed.
Analysis
Innovative … transformational … creative … responsive … client-friendly
Unfortunately, these are not words typically associated with the Life Insurance industry. However, they do describe a few of the competencies that will be needed to address the challenges articulated in the Ernst and Young article.
Great! Many investors, clients and businesses associated with this large industry may welcome the changes that could take place.
In my corporate career, I had the challenge and “privilege” to do many turnarounds of underperforming National Sales, Services, Finance and Operational areas at Global 500 Financial Services organizations. I’ve identified two key drivers for my success; which are the same drivers needed by these multi-billion dollar Life Insurance companies to meet their challenges. They are:
1 - Execution Excellence – Getting their strategy actually implemented on time and under-budget through competent, accountable leadership
2 - Executive Stewardship – Delivering courage and commitment during turbulent times without a detailed map and with “non-controllable”, random outside influences
Let’s succinctly identify the key impact of Executive Stewardship. The background: Right now, as you’re reading this, roughly 84% (that is a HUGE percentage which includes companies “in” the standard bell-curve (68%) and those below the bell-curve (16%)) of the companies have either “challenged” or “industry average” leadership teams. This is not a personal opinion; rather, it’s merely a general statistical observation of this or any industry.
Thus, we can with reasonable confidence conclude; at least 50% of the Life Insurance industry’s leadership teams do not possess the desired Executive Stewardship to steer the organization through turbulent times. Therefore, these organizations will either survive or be consumed by another organization, primarily influenced by the level of turbulence in the market; without regard to the leadership team. Vulnerability!
Execution-Excellence (Ex-Ex) – This holistic, critical organizational competence will be the primary driver in determining who grows and who will become a “has been”.
Below is a short list of macro categories in which an intelligent strategy coupled with an accountable leadership team, will need to be executed “better than average” in the industry to assure the company an opportunity to see 2010 and beyond:
* Compensation systems properly “underwritten” and aligned with “accurate” KPI’s
+ Ineffective programs that are not strongly aligned with desired results and cost structures, will become brutally painful
* Sales distribution models completely understood and integrated “financially, effectively” (this can be a materially significant expense error)
* Service delivery optimized while reducing expenses and increasing margin-per-client
+ This requires sophisticated segmentation of client bases and effectively used in EVERY division of the company
* Sound business practices "working" in important areas that unfortunately have upsides of zero to the public, but are critical to your operations and bring significant downside when they are poorly handled (e.g. risks, PR bombs, etc.)
For those top performing organizations and leaders; these are the times in which you shine!
Enjoy the spotlight ~ Jim Roncevich
