Tag Archives: P&L

The Formula for Getting Growth Results

Real growth — not incremental improvements to last year’s numbers, but big results coming from new opportunities you manage to seize and commercialize — is hard to come by.

There are so many distractions, so many rabbit holes you can fall into — the lure of a cool technology, a move by a competitor that appears to be smart, a high-pressure conversation with a board member, a convincing argument from a colleague on why an idea will or won’t work or a CFO waving a red flag.

There are also so many ways to convince yourself that the status quo, at least for now, is tolerable — the comfort of a good current quarter, the reassurance of lots of money being plowed into new technology, the establishment of an innovation team or being recognized with an industry award.

But somehow, things still don’t feel quite right. You wonder why, in spite of upbeat business reviews from trusted employees, the new product pilots aren’t quite panning out. Some new start-up (or two, or three or more) seems to be whipping up a storm in the market, and you feel left in the dust (or left to contemplate paying a hefty premium to buy what someone else managed to build right under your nose).

What to do?

The answers are astoundingly simple, so simple, in fact, that they elude the very smart, big-school-degree types running around corporate America today. These leaders are fully in control of their growth destinies, yet all too often are unable to deliver and either blame some externality or create a mirage that all is well.

Here’s the three-step formula to get real growth:

  1. Define the customer problem you are solving. This is the first, almost painfully obvious step. Yet, consider how many people in big roles define their business’ marketplace value around internally generated definitions of value, claim to know customers’ needs but never talk to customers or allocate resources to deploy new technologies with no connection to how customers act or how they lead lives in which your business probably plays only a teeny, tiny role.

Let’s parse what this first step means.

  • Define: with absolute clarity, in a way that lets you understand the total scope of opportunity, not just what’s in front of your nose and linked to today’s P&L drivers.
  • The: one, with focus.
  • Customer: the people who take their wallets out of their pockets and give you their money – not the internal lobbyists.
  • Problem: a real pain point, not something that merely makes people feel good. People will prioritize getting rid of their pain as way more important than a gratuitous feel-good purchase.
  • You: the bigger you, the organization, mobilized around your singular focus.
  • Solve: dramatically better than anyone else, so you have a massive jump on others in the market who will chase after any good business opportunity to eat into or take over share.
  1. Establish the fundamentals to cultivate growth.
  • Governance: If your plan is to create big sources of growth, the CEO has to own the goal, including implementation, and hold the rest of the C-suite accountable. If not, accept your destiny as an incremental player, at best.
  • Accountability: Big new sources of growth will come from separate accountability outside the established P&L structures. No fault to the P&L leaders; their work is important and drives the company today. But the goals, timeframes, talent and implementation path to run a scale business is based on predictability, control and risk reduction. Contrast these attributes with what’s needed to spawn a big, new business: experimentation, failure, ambiguity and risk-taking. The established P&L priorities will always overwhelm the nascent ideas trying to grow into big future profit producers.
  • Talent: The people who are absolutely brilliant at running the machine are unlikely to be the same folks who will create the next big thing, and vice versa. That’s not personal, it’s the reality that we are all really good at some things and mediocre at others and should just avoid yet others. Be truthful about that, both regarding yourself and when evaluating others.
  • Metrics: Find the metrics that connect customer needs and wants to the customer actions driving the P&L. It’s a cop-out to say this can’t be done, and it’s easy to fall back on familiar but irrelevant metrics. Focus on customer behavior measurements to drive decisions. High-level reporting of income statement and balance sheet line items are interesting, and certainly matter to your investors. But they will blind you to the below-the-surface measures that matter – the real drivers that are moving every day as your customers make decisions affecting your performance whether or not you acknowledge them. Operate your business at that level, and you will drive your destiny.
  • Process: Industrial-strength processes that enforce predictability, control and risk reduction will steamroll over anything that doesn’t look exactly like what came before. Remember the definition of insanity often attributed to Albert Einstein: “doing the same thing over and over again and expecting different results.”
  1. Embrace and behave according to the mindset of a founder, or move on. In The Startup Playbook, author David Kidder cites the five qualities of the successful entrepreneur. These attributes apply equally well to leaders in any enterprise, not just what we have traditionally defined as start-ups.
    1. Know thyself. Your team’s success will be a direct reflection of your self-awareness and deployment of your own gifts to whatever opportunity you go after.
    2. Ruthlessly focus on your biggest ideas. Focus means laser-like drive against the beacon you see out in front of you that represents realization of your solution to the customer problem. But not to the exclusion of listening – being able to filter and apply that which is valid, without getting diluted by the well-meaning, but utterly useless opinions you will be offered. It’s a tightrope.
    3. Build painkillers, not vitamins. Back to Point 1. Solve a real problem. Don’t create a nice-to-have.
    4. Be 10x better. That’s Kidder’s estimate of how far ahead you have to be to outrun and outlast the inevitable competition.
    5. Be a monopolist. At least in mindset, think gigantically. Think about how you can own the market, not just create something that will satisfy a near-term demand.

Creating big sources of growth with real results can be predictable. You just have to follow the formula.

This post also appearing in Huffington Post.

From Marketing Myths to Truths

No insurance executive in touch with the marketplace would deny that traditional distribution is no longer a reliable way to deliver dependable sales and enduring customer relationships. The adviser-based model is under threat in most sector categories. Why? There are many reasons, but two at the top of the list are:

  1. Customers are changing – the Millennial generation shops and buys differently than their Boomer parents, and even Boomer habits and expectations are changing in the digital world.
  1. Technology has disrupted the distribution model, as it has disrupted everything else in its wake – the experiences, access, transparency, ability to compare and socialize at any moment from any location – dislodging practices that were deeply rooted for decades.

As a result, carriers are being forced to recast not only distribution itself, but also the entire ecosystem that enables distribution to do its job:

  • Product – must be simpler, understandable to the average person and offering a real benefit worth the price
  • Service – must be always available, accurate and helpful
  • Channels – must be consistent on all dimensions – as a client, I want to feel I am dealing with the same company wherever I go looking for you, whether online, on the phone or in person
  • Underwriting – must use data in ways that are respectful and pass the test of being reasonable in the client’s eyes

Perhaps most of all, insurers must put aside marketing myths and see marketing as more than an optional cost center that puts sponsorships in place, designs product brochures, supports trade show presence and runs advertising campaigns.

Marketing done right can become the function that unifies your business around the client, and fuels answers to these critical questions:

  • Whom do you really want to have as your customers?
  • What are their needs, both emotional and rational?
  • What are the ways you can meet those needs?
  • And how can you do so better than competition, within a good economic and risk structure?

The insurance industry seems to live by a series of unfortunate beliefs about what marketing is and what it is not. These marketing myths stand in the way of putting the huge potential of this function to work to meet your business goals.

To enable marketing to have the impact on your business that it can have, put these myths aside and empower a capable team to help drive growth.

Marketing Myths Marketing Truths
“Brand” and “advertising” are synonymous. Brand defines what your company stands for and connects people in ways that help them see you as relevant in their lives … leading to purchase and loyalty. Everything you do is a manifestation of your brand, whether or not you advertise.
Marketing is a cost center. Marketing is an investment. Marketing is a leader in creating profitable and persistent revenue growth, by helping to identify the right customers, gather their needs and provide direction to the organization on how to fulfill those needs.
Marketing people are creative types, not business people. Yes, as in every business function, creativity is demanded. But marketing today is a technology-driven function and drives P&L, so a close partnership between internal tech professionals and external providers is a must.
Product builds, distribution sells, marketing supports. Insurance is an experience business. It’s not just about policy bells and whistles, it’s about the end-to-end experience of engaging with your brand from pre-sale to post-sale to continuing servicing and claims. This means internal silos must be eradicated and collaboration must be a defining attribute of your culture, or your customer will feel the negative effects of self-imposed internal barriers.
Marketing decisions are made on gut. Marketing is a data-driven discipline, requiring a special mix of talent and skills to get the right data and use it to create customer experiences that will drive business results.