Tag Archives: peter drucker

‘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!

The Revolution Is Coming! Be Ready

The world, the world of risk and risk in the world will be as different in 2020 as the original 13 colonies were from the U.S. as it is today.

The bad news is that Paul Revere won’t ride through your town alerting you.

So you'll have to settle for me — and I am, in fact, giving you enough warning to design your future, and not just manage toward it.

Understand: When one thing is different, it is change. When everything is different, it is chaos.

Change works for dinosaurs. Chaos doesn’t.

But chaos brings opportunity for those who are prepared, and, if you’ve survived in this industry for any length of time, you are able to adapt. Your only issue is one of willingness.

What follows are the 10 environmental factors that, in combination, are triggers of the coming Risk Revolution. These cultural changes are fissures in the foundation of the “good old days” and render vulnerable all traditional institutions and structures that have done so well for so long.

  1. Loss of innocence: When President Nixon said during the Watergate scandal, “I am not a crook,” he acknowledged the end of command and control. Raw power could no longer sustain the most powerful man in the world. As citizens, we confronted the “feet of clay” of our leaders. What Nixon did to weaken our trust in our political leaders, terrorists in airplanes on 9/11 did to our confidence. We won two world wars and are insulated and isolated from the “evil” out there by oceans on our coasts, but it is not enough. We have to accept we are vulnerable.
  2. Katrina was a “girl” but she was no lady: When Hurricane Katrina hit the Gulf Coast in 2005, it breached levees and created a Mad Max world that none were ready to face. Our institutions – federal, state and local government, the Red Cross, etc. – were supposedly built for catastrophes but failed us. Our confidence in our system of order was lost. We must rethink the world.
  3. “Hell no, we won’t go”:  war protests, burned bras, tie-dyed T-shirts, Elvis and the Beatles, hippies who protested everything except the right to protest. This was the marketplace speaking for the first time. Tomorrow, the market won't be quieted.
  4. ________ – Americans:  African-Americans, Asian-Americans, you-name-it-Americans. We're no longer a homogeneous nation. One size does not fit all. The change will accentuate the world of niches, affinity groups and “verticals” and so fragment the market that mass customization will be required, down to a niche of one. We want it “our way,” and not just in fast food.
  5. The front porch and the back fence are gone: Time and place now have little value, and “pace” is as fast as the buyer wants it to be. The question is: If Gen Y is known for a lack of empathy, how do you sell in a nonverbal world?
  6. Tennis balls and Patty Hearst: Sgt. Gill, an intelligence officer, told me in 1972 about satellites that could read the label on your tennis ball while you were playing. In 1973, Jim, another military intelligence guy discovered that, while his data mining model couldn’t help the FBI find Patty Hearst, he could find everyone in America who was just like her. In an era of satellites/drones/etc. and big data, what happens to privacy?
  7. Miss Hathaway: In the finance department of LSU, Joan always reminded me of Miss Hathaway from “The Beverly Hillbillies.” She told me decades ago, “Mike, this LexisNexis thing is going to be big.” She was talking about the Internet. She was right.
  8. From Ozzie and Harriet to Archie Bunker to the Huxtables to the Simpsons to the Modern Family and maybe to the Jetsons: The world keeps changing, and lots of people don't like that. They want to hold on to the past. Political correctness, shouts of racism and sexism, a bipolar political process, extremes, etc. all limit our willingness to hold hands and sing “Kumbaya.” We are changed forever, and so is our society and its most basic building block – the family. Deal with it.
  9. “If you have all your eggs in one basket, make sure it’s a strong basket.”: That line, from a Volvo ad, circa 1980, applies today because we are betting the economy and our world on technology . What happens if a natural disaster, a terrorist, an enemy or sun spots disables our technology for a week, a month, a year?
  10. Addictions: Addiction to the status quo is the worst. In this most serious form of dependency, we sacrifice everything to do nothing but protect our comfort zone. The insurance industry once owned the world of risk. Now we have done more than “let the camel’s nose under the tent.” We are now sleeping with the camel. When the market demanded innovation, we too often failed to provide it. Instead we gave up our responsibility and let government and others do what we didn’t want to do. Captives, alternative risk funding, HMOs, the ACA, self-insurance and the National Flood Insurance Program are all examples of decisions being made without us. That is the nature of markets. We were too slow, and something else filled the void. We still face two fundamental challenges: Our products are priced beyond the ability of many consumers to pay, and some embrace a “nanny state.”

The trends identified are not all right and they are not all wrong. They just are. What will 2020 bring your world? What will you do to prepare?

Remember the admonition from Peter Drucker, “Whom the gods wish to destroy, they send 40 years of prosperity.” The last decades have been good to us. The next decades can be, too, but only with the right amount of awareness, preparation, discipline and commitment.

George C. Scott, playing Gen. George Patton in the movie “Patton,” said: “In times of war, all other forms of human endeavor shrink to insignificance.” 

Are you ready, willing and able to fight and prevail in the coming Risk Revolution?

A Primer on Leadership: the 26 Most Important Quotes

The starting point

 “The absolute of leadership is followers.” — Peter Drucker, management guru and author of dozens of influential books

Defining reality

“The first role of the leader is to define reality.” — Max DePree, former CEO of Herman Miller and author of Leadership Is an Art

Verifying reality

“All the well-meaning advice in the world won’t amount to a hill of beans if you’re not addressing the real problem. And we’ll never get to the problem if we’re so caught up in our own autobiography, our own paradigm, that we don’t take off our glasses long enough to see the world from another point of view.”  — Stephen Covey, author, 7 Habits of Highly Effective People

A shared characteristic

“All of the great leaders have had one characteristic in common: It was the willingness to confront unequivocally the major anxiety of their people in their time.” —  John Kenneth Galbraith, economist and author of dozens of books

The objective

“The task of a leader is to get people from where they are to where they have not been.” — Henry Kissinger, secretary of state under President Richard Nixon and President Gerald Ford

The functions

“Change is the transition from today through tomorrows.” — Mike Manes, founder, Square One Consulting

“Change management is solving problems and capitalizing on opportunities during the transition.” – Manes

“The best way to predict the future is to create it.” – Drucker

The challenge

“There is no more delicate matter to take in hand, nor more dangerous to conduct, nor more doubtful to success, than to step up as a leader in the introduction of changes. For he who innovates will have for his enemies all those well off under the existing order of things, and only lukewarm supporters in those who might be better off under the new.”  —Niccolo Machiavelli, author, The Prince

The risk in failing to lead

“Take change by the hand before change takes you by the throat.” – Winston Churchill, former prime minister of England

The importance of vision

“Where there is no vision the people perish.” – Proverbs 29:16

“People change what they do less because they are given an analysis that shifts their thinking than because they are shown a truth that influences their feelings.”– John P. Kotter and Dan S. Cohen in The Heart of Change

The best example of vision

“I believe that this nation should commit itself to achieving the goal before this decade is out, of landing a man on the moon and returning him safely to earth.”  — President John F. Kennedy, May 25, 1961

The importance of leadership

“The only thing necessary for the triumph of evil is for good men to do nothing.” — Edmund Burke, Irish statesman, author and philosopher

What leadership is not

“Consensus is the absence of leadership.” — Margaret Thatcher, former prime minister of England

A bias for action

“If you start to take Vienna – Take Vienna.” — Napoleon Bonaparte, emperor of France from 1804 to 1814

“I can accept failure, but I can’t accept not trying.” — Michael Jordan, former NBA star

“Don’t find fault – Find a remedy.” — Henry Ford, founder of Ford Motor

“There is no limit to what can be accomplished when no one cares who gets the credit.” — John Wooden, UCLA coach who won 10 NCAA basketball championships in a 12-year stretch

“A man could do nothing if he waited until he could do it so well that no one would find fault with what he had done.” – Anonymous

“There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.” — Kennedy

“Nothing in this world can take the place of perseverance. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Perseverance and determination alone are omnipotent. The slogan ‘press on’ has solved and always will solve the problems of the human race.” – President Calvin Coolidge

“Just do it!” — Nike

The test of leadership

“If the end brings me out right, then what is said against me won’t matter. If the end brings me out wrong, then 10 angels swearing I was right would make no difference.” – President Abraham Lincoln

“It is not the critic who counts, or how the strong man stumbled and fell, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, who knows the great enthusiasms, the great devotion, and spends himself in a worthy cause; and if he fails, at least fails while daring greatly, so that he’ll never be with those cold and timid souls who know neither victory or defeat.” – President Theodore Roosevelt

“Fall down seven times, stand up eight.” — Japanese proverb