Tag Archives: agency 2020

Getting to 2020: the Right Way to Lead (Part 4)

“We have met the enemy, and he is us.” Walt Kelly, Pogo

To conclude this four-part series on setting your agency up for what it needs to be in 2020 (the first three parts of which can be found here, here and here), I asked a longtime friend to describe the surprise he experienced when it came to leading just such an effort. Many of you will face the same surprise, so what he says is well worth reading. I’ll follow his thoughts with two exercises that will help you avoid nasty surprises and will help leaders and agencies make the necessary transition.

Here is what my friend wrote:

“Like many independent insurance agencies, ours is a family business that has been passed through successive generations. Entering our 85th year, we are in the midst of a transition from the third generation of family ownership/leadership to the fourth.

“Like most agencies, we face an array of challenges. We face looming retirements for our most successful producers and most experienced staff. The decision-makers at both our clients and our insurance carriers are also retiring, and their younger replacements are unaware of all the great work we have performed on their behalf for all of these years. On top of that, we can add increasingly cumbersome regulations — especially in employee benefits — the dizzying array of new, complex product offerings from our carriers and the need for massive technology upgrades.

“The pace of change has been accelerating within our agency, but only recently have we begun to deliberately chart a course that will prepare our agency to thrive in the competitive landscape we anticipate in the year 2020 and beyond. Within our partnership group, the concerns and deliberations usually focused on our staff’s willingness and ability to adapt and grow into the roles we will need them to perform in 2020. We focused on planning and communicating our initiatives to garner staff support. We stressed the mutual benefits and long-term opportunities available through our Agency 2020 initiative. Conventional wisdom said the main threat to our success would be skeptical, change-adverse staff members.

“The conventional wisdom was wrong.

“The main threat to our success was the commitment we had not secured from each other, the agency partners. Midstream, we discovered that we all had different levels of faith, commitment and desire in an initiative that would last beyond some influential partners’ tenures. We were faced with two paths. One involved structural, compensation and leadership changes, and it held the potential — but not a guarantee — of internal perpetuation. The other path meant an immediate and reliable payout by an outside buyer, but also working for someone else and the end of our 85 years of tradition.”

How to avoid the nasty surprise

This article is not a debate on the pros and cons of selling your agency. This article is about unity of effort. This article is about a willingness at all levels to change. This article is about committing to a common goal. If you want to perpetuate your agency in the next five years, your entire organization must be committed to this goal, starting with your ownership. The same is true if you want to maximize your agency’s sale value in the next five years. However, if your ownership’s main goal is to maintain the status quo — the compensation model, the production model, the vacation time — then you do not have real commitment, and you are destroying your agency’s value through inaction with each passing day.

To really ascertain your ownership group’s commitment, I believe you need to have a frank and open conversation. Ask each member to independently complete the following exercise. Leave space after each question, and require the respondent to explain her answer.

Exercise #1

Relative Value

    There are 20 points available in this section. Have each owner assign these 20 points to the following items. Ask which two items he would be willing to sacrifice to protect his top two items.
  • Individual production income
  • Total agency profit
  • Total agency value
  • Ability to influence agency decisions
  • Ability to craft agency culture
  • Lifestyle (vacation time, ownership perks, etc)
  • Maintaining the agency as an independent, going concern


    Ask each owner to rate the agency on these criteria on a scale of 0 to 10. Scores of 0 to 6 mean, “I’m pretty doubtful about this”; scores of 7 to 8 mean, “We can probably do this”; scores of 9 to 10 mean, “I am very confident we can do this.”
  • We have the producers in place or can recruit, train and retain the necessary producers to achieve our year-over-year sales goals for the next five years.
  • We have the carrier appointments/relationship or can develop the necessary carrier appointments/relationships to support our agency’s growth over the next five years.
  • We have the profit centers or can develop the profit centers we need to support our agency’s growth for the next five years.
  • There are enough clients/prospects within our reach that need our products and services, or we can develop that marketplace to sustain our agency’s growth over the next five years.
  • The marketplace, industries and populations we serve are in ascendancy.


    Ask each owner to rate the agency on these criteria on a scale of 0-10. Again, scores of 0 to 6 mean, “I’m pretty doubtful about this”; scores of 7 to 8 mean, “We can probably do this”; scores of 9 to 10 mean, “I am very confident we can do this.”
  • We can retain, attract or develop enough qualified staff to sustain our agency for the next five years.
  • We can evaluate, install and utilize the necessary technology and workflows to keep our agency efficient and competitive for the next five years. We can remain profitable even if commission levels are reduced.
  • We can accommodate the physical space needs of our agency for the next five years.


    Ask each owner to rate the agency on these criteria on a scale of 0 to 10.  Again, scores of 0 to 6 mean, “I’m pretty doubtful about this”; scores of 7 to 8 mean, “We can probably do this”; scores of 9 to 10 mean, “I am very confident we can do this.”
  • We have or can develop the leaders and managers our agency will need for the next five years.
  • We have sufficient alignment and commitment from our ownership group to sustain our efforts for the next five years.
  • Our ownership group is willing to innovate, delay gratification and make personal sacrifices to enable the agency to reach its goals for the next five years.

Now aggregate your data. You will need to identify both trends and outliers, and you must depict the data in a manner that best speaks to your group (narrative, spreadsheet, graph, interpretive dance…). Then gather your group together and facilitate a discussion on each section. Allow all sides to be heard, especially the outliers — they may be out in left field, or they may be on to something. When you get to the end of the list, step back and look at the responses as a whole.

Now ask each member to complete the next exercise by providing a detailed response to these questions:

Exercise #2

Five years from now:

  • This is what I plan to be doing and how I got there.
  • This is what the agency will look like:
    i.      Volume
    ii.      Number of people
    iii.      Location(s)
    iv.      Products
  • This is who will be serving in leadership positions.

Ten years from now:

  • This is what I plan to be doing and how I got there.
  • This is what the agency will look like:
    i.      Volume
    ii.      Number of people
    iii.      Location(s)
    iv.      Products
  • This is who will be serving in leadership positions.

Again, aggregate your data and look for those trends and outliers. Ask each member to talk through their vision for the agency. It is unlikely that every vision will be similar, so you will probably have two or more “camps” that form. Ask each camp to contrast its vision with the group’s results from Exercise #1. Are they compatible? Which vision from Exercise #2 best aligns with the reality you determined in Exercise #1?

Can your group coalesce around this as the common vision? You probably now see yourself in one of three states: 1) everyone is clustered around a common, viable vision (best-case scenario); 2) a majority feels one way, with a united or fractured opposition group (most likely scenario); or 3) everyone is all over the board (worst-case scenario).

If you’re lucky enough to be in Group #1, go out there and get to work making your vision a reality. If you’re unlucky enough to be in Group #3, I suggest girding yourself for a long, frustrating process, and recommend you bring in some professional facilitation.

For the majority out there, you will have to find a way to resolve the gap between your majority and minority opinions. Search for compromise. Approach each perspective with empathy. Work to achieve the best possible solution, not just the solution that best suits your personal situation.

Here are a few thoughts I recommend you keep in mind: 1) Debate, disagreement and compromise are positive features of any high-performing organization, but the majority must be able to make decisions. A minority opinion cannot hold the agency hostage. 2) The agency’s path forward cannot be responsible for compensating for past mistakes. Your past mistakes are sunk costs. Resolve not to repeat them in the future, and move on. You also don’t have to fix everything at once. 3) Don’t fight over problems that will fix themselves with time. If you can afford to accommodate something for the short term that will benefit the agency in the long term, then make that deal.

Working through these exercises will allow your ownership group to agree on the vision that best builds your agency’s value. These are hard, personal conversations, but exercises like this are part of being agency stewards, and as agency stewards it is your responsibility to constantly build agency value.

What you choose to do with that value is also up to you. That is the ultimate privilege of ownership.

Getting to 2020: Redefining the Culture (Part 3)

This is the third in a series of four articles that offer a “road less traveled” to Agency 2020. The first article focused on your agency in the marketplace’s current reality. The second article considered the world as it might be in 2020. Today, we address the processes necessary to ensure you have the “seed corn” to grow the culture and structure necessary to produce Agency 2020 and win in the marketplace of tomorrow.

Mohan Nair, in his book, Strategic Business Transformation, diagrams a world of yesterday where 80% of change was incremental/cyclical and 20% was structural/transformational. Today, he says, “When the unknown are threatening every variable we have counted on, 80% of the variables that shift are structural while 20% are predictable. We cannot use the strategic data used in the past to find our ‘true north.’”

Your successful organization today is driven by its culture: “the house rules,” “what’s tolerated.” This organization and culture were created for the world of yesterday (“Daddy, may I?”) and today (“What do our carriers say?”). If you believe the world of 2020 will be different, you must create a culture appropriate for that new world.

The Gospel of Mark (3:25) and then Abraham Lincoln stated that “a house divided cannot stand.” This was true in their world of incremental change. Theirs was a world that moved at the pace of a tortoise. Tomorrow’s world will move at the pace of the hare (but never stop for a coffee break).  As has been said: “It’s not the big that eat the small. It’s the fast that eat the slow!”

Most people are reluctant to change. As Maxine puts it, “Change is good as long as I don’t have to do anything different!” In your organization, most folks are comfortable in their jobs, see the world as it is and are terrified that things will change. A minority of folks who are enthusiastic about the new, virtual world and global economy see the world as it will be and are terrified that your organization won’t change.

Your house is already divided.  What you need to do is merely focus each segment on the role right for them.

Both groups are necessary for success, but you must answer one question for each group and each individual. WIIFM? – What’s in it for me?

Do this, and they’ll embrace your plan; ignore WIIFM, and they’ll sabotage your future. Be respectful of all. Understand that there are different “tolerances” for risk and that people discover, learn and adapt at different speeds.

Gather your team. Put them at ease. Make the environment safe for them. Explain that you want to structure change to give every contributor an opportunity to continue their success today and find the right fit in the world of tomorrow. Celebrate your past and thank them for their participation. Clearly articulate your embrace of the inevitable change necessary for tomorrow and your commitment to your team’s success in the future.

Announce your plans to begin an Agency 2020 initiative. Explain that to build a foundation for success you need two teams. This process will not be instead of their existing roles but as an extracurricular activity. This initiative is about assuring a future with opportunities for each other. This is about each voice being heard.

The first group will immediately focus on the existing organization – making it more efficient and effective to create the “seed corn” (profits) necessary to finance tomorrow. The group’s task will be to create an operational “to do list” defining and acting on what is necessary for enhanced success today and to quit doing those things carried forward from yesterday but no longer needed today – “we’ve always done it this way.”

The “tomorrow team” will be the young at thought and the young at heart. They will be your pioneers. They will be charged with discovering tomorrow as it will be and creating a blueprint to build your organization as it must be to fit in 2020. This process is not intended to exclude the traditionalists. Both teams will be encouraged to share their discoveries and enthusiasms – to create excitement about today’s improvements and refinements and tomorrow’s innovations.

Don’t create competition between the teams – encourage collaboration so that respect and trust will build. This will work because each group is focusing where “they live” – their comfort zone — and you are not forcing them, at this time, to go to where they don’t want to be. Assure all team members that, as the blueprint for 2020 is designed and new roles are defined, each person on staff will have the right to be considered for jobs right for them and your organization. Promise them the training necessary for success. If they can’t or won’t fit into the world of 2020, facilitate their exit. Make it as painless as possible.

For the Today Team, some ideas to consider and questions to ask (there are more):

  1. Focus – take out the microscope and study every function you perform.
  2. If “we’ve always done it this way” – it can be changed for the better.
  3. What are five things we do today that no longer need to be done?
  4. What are five things we do today that remain important and can be improved?
  5. What are the jobs skills that remain important today? How do we improve these?
  6. What are skills no longer needed in the world of today? How do we let them go?
  7. Do we have the technology (systems and social media) needed for today?
  8. What and how can we maximize our results from this technology?
  9. Does our “client experience” differentiate us, or are we “the same old same old?”
  10. Are we capturing the data available and converting this to actionable knowledge?
  11. Where must we invest our time and energy?
  12. What must we leave behind?

Please remember – the Today Team is about updating (remodeling) the organization you have. Its role is small steps – process improvement.

Think outside of the box. Remember the words of Einstein – insanity is “continuing to do what you’ve always done and expecting a different result.” The world has changed more in the past 10 years than the previous 50, yet most agencies continue to do what they’ve always done. Don’t be crazy. Discover and do what needs to be done today to prepare for tomorrow.

The Tomorrow Team is about designing a blueprint and facilitating the building of the organization and culture you’ll need for the future. The team’s role is “giant leaps” – innovation. You are moving from the mechanical processes of yesterday to a new “living” system for tomorrow. Be bold. Don’t be afraid to fall – just do it, and learn from the experience.

For the Tomorrow Team, some directions and innovations to consider (there are more):

  1. Scan the horizon of the world and technology. Look outside your comfort zone.
  2. Determine if “place” will matter — where you, your employees and clients are.
  3. Determine if “time” will matter? Is “Working 9 – 5” only right for Dolly Parton?
  4. Determine the role of cultures and generations for buyers and those who influence decisions.
  5. What are the talents needed? Prioritize communication, technology, insurance, etc.
  6. What will be client needs? How can you deliver solutions profitably?
  7. Shift your focus from products sold in the past – to client needs in the future.
  8. What will be the demographics and psychographics of the populations served?
  9. What will be the industries/market niches in collapse/decline? Avoid them.
  10. What will be the industries/market niches in ascendancy? Focus on these.
  11. How do you manage in a “virtual” (no time, place and more non-verbal) world?
  12. What will be the role of big data? What will be your ability to use it effectively

The questions are offered as a starting point for discovery. You have many more questions to ask and answer. Yours is a world yet to be – not a world that is. Nonetheless, the better you ponder and plan, the better your head start on the future – the New World of 2020 – will be.

Learn from the great change architect Peter Drucker, who said, “The best way to predict the future is to create it.”

‘Agency 2020’: Can You Get There? (Part 1)

It’s been 45 years since astronauts Neil Armstrong and Buzz Aldrin first walked on the moon. “That’s one small step for man, one giant leap for mankind,” Armstrong said. Many consider this to be mankind’s greatest adventure. Today, you should begin planning for the greatest adventure in your agency’s history. Now is the time to prepare for what I call “Agency 2020.”

This is your mission: to survive and prosper in tomorrow. It’s a Star Trek mission. Your challenge is to seek out new life (future consumers) and civilizations (niches and affinity groups), to boldly go where no man (or insurance agency) has gone before.

This preparation is merely one “small step” to fully critique, improve and prepare your agency today so that it can explore strange new worlds – the global and virtual marketplace – that will be prevalent in 2020. In other words, you need to prepare your organization for the one “giant leap” required for future prosperity.

To give you perspective on the world of 2020, consider this statement from a July issue of The Kiplinger Letter: “The next big phase in computerization: connecting all objects of all sorts … buildings, industrial machinery, appliances, medical devices, vehicles, roads, containers, apparel and much more. In an ‘Internet of Things,’ 26 billion objects will communicate with others by 2020 … up from a piddling 1 billion things doing so now.”

Other sources suggest even greater connectivity – with some predicting 50 billion or more “things” talking to each other daily. That is seven times what the world’s population in 2020 is predicted to be (7.6 billion people, according to infoplease.com.)

That connectivity will be transformational. Everything will be in flux: industries, delivery systems, communications, smart data, products offered and not offered, risks, pricing, value-added services, insurance (healthcare, loss control, underwriting, risk management, safety, etc.), banking and education and even everything about how, what, where and why clients shop and buy.

When one thing is different, it’s change. When everything is different, it’s chaos.

The year 2020 will have chaos, and in chaos there’s great opportunity.

If my first few paragraphs have confused or upset you, don’t worry. We’ve already walked on the moon! Anything is possible. To do great things, you merely need a purpose and a vision, a commitment to both, a plan and the discipline to live the commitment you’ve made. Join us in this exciting five-year mission.

Let’s start at square one. As the American businessman and writer Max Depree notes: “The first role of the leader is to define reality.”

This article offers a simple process to follow through on Depree’s advice. Questions are asked, and you merely answer them – honestly and completely. Today you are establishing your starting point for your trip to tomorrow. Remember, if you misrepresent on the front end – you will not reach your planned destination.

This process will be simple. Some questions are included under each category below. This is an essay test. But it’s essential that you answer as truthfully and as completely as possible! Ask, ponder, challenge, reflect and ask again.

1.         Leadership

  • What is your culture? In other words, what is tolerated? What are your house rules? As the leader, do you control and direct the culture, or does the culture dictate to you? Be honest.
  • What is your reality – i.e., history; financials; SWOT analysis identifying your strengths, weaknesses, opportunities and threats; marketplace presence by way of customers served and carrier relationships; demographics and geography; viability (is yours a Rust Belt or Silicon Valley organization); etc.? Also consider where your world is heading.
  • Is passion or pessimism the rule in your environment? Is your team passionate in what they do? Are clients passionate about what is being done and how you serve them? Do your team members see themselves as victims or victors? Is your team committed to the adventure called tomorrow –  or are individuals looking to jump ship at the first opportunity?
  • Are plans in place for the perpetuation of leadership, key roles, books of business, market niches, offerings, opportunities, relationships, technology, etc.?

2.         Operations

  • Are you low-tech (suicidal), medium-tech (terminal in the long run) or high-tech (viable and vital and the only acceptable option)?
  • Is your team adaptable – willing and able to embrace technology, the virtual world, social media and innovation as it occurs? Do you have a balance of generations – Greatest, Boomer, X, Y and C – and the wisdom and perspective each can offer? Is there balance in your management and operations, or are you fragmented?
  • Are you paperless, client-defined and -driven, connected, tech-committed and -focused, virtual and balanced in the new world of “Tech-Knowledge-Y”? Are you really?
  • Are you “owned” by yesterday and its traditions – office buildings, eight hours at the desk, hierarchy, producer- and product-defined and -driven and based on seniority rules, that family is more important than performance, etc.? Be honest.

3.         Marketing

  • Do you know your customers as individuals, in niches, as parts of an affinity group? Are you willing to serve them as a “niche of one?” Every consumer in 2020 has unlimited options!
  • In your current system, do products and services dictate your focus? Or do the wants and needs of your clients and prospects dictate what products and services you offer?
  • Are you structured based upon Peter Drucker’s 1993 concept of “price-driven costing?” (That is, determining what your customers think a service or product is worth and then designing it accordingly. ) Do you control or influence the price of what you sell? Can your clients afford your product offerings? Are you constantly striving to bring your cost down?
  • As markets innovate and become more competitive, can you profitably deliver what you sell at a price the market is willing to pay? Do you block markets to protect your client or your agency? Do you and your clients have a conflict of interest in the world of “hard” and “soft” markets? Can you retain clients if your offering was quoted net of commission and you had to work on fees, not commissions? Be truthful.

4.         Communications

  • Do you know your clients – their wants, needs, values, expectations and fears? Or do you merely know their purchases? What is important to them? What is their risk-taking tolerance, and what are their available resources?
  • Do you sell products/services/commodities? Or do you facilitate your clients’ buying what they want and need? Are you more focused on closing a transaction or creating a positive experience?
  • Do you have a formal system of client-relationship management? Do you tailor solutions for clients’ problems, or are you merely the checkout counter once they find what they need? Can you anticipate their future needs?
  • As an intermediary between your clients and the marketplace, do you stand closer to the client … or the carrier? Who “owns” you? Are you addicted to existing products, commission streams and delivery models? Or are you willing and able to take “the road less traveled” and find the future as it will be?

(Suggested reading – Unbundling the Corporation, by John Hagel III and Marc Stinger, Harvard Business Review, March-April 1999)

This brief inquiry was designed to create “chest pains,” because “chest pains” will often change behavior. This article is not intended to be an all-inclusive study but rather a reality test of your leadership. Are you willing to see your agency and the marketplace as it really  is — or only as you want it to be?

If you don’t get the starting point right, the end game of Agency 2020 is impossible to target accurately. You can’t get there from here!

First, test your resolve, your commitment and your discipline. If these are real, go back and answer the above questions more honestly. Future articles will provide a process that will facilitate your “small steps,” or tactics, as well as the “giant leaps,” or strategies, so necessary for success.

Subsequent articles will cover:

  • A process for discovery of 2020 as you project it to be
  • How to maximize the efficiency and profitability of your agency today
  • How to answer the one question that is all-important for each stakeholder: What’s in it for me?
  • How to design a blueprint for your Agency 2020 initiative
  • And how to facilitate the transition of all stakeholders from where they are today – to where they are willing and able to be (and must be) tomorrow – whether those stakeholders are inside or outside of your organization

Don’t panic or become discouraged. Remember, we’ve already walked on the moon!

Commit to 2020 – and be disciplined to your commitment!  One day you’ll be ready to declare your purpose and vision – your organization’s leadership role and success in 2020!