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DPI Client Interview
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Title insurance. To most of us, it's just one of those details that comes up in the blur of closing a real estate transaction. But, to LandAmerica, it's their bread and butter. Or was -- until a startling revelation occurred as the company's managers went through DPI's Strategic Thinking and e-Strategy Processes.
Currently, LandAmerica is the second largest U.S. supplier of title insurance policies at about $2 billion in revenues. The company is the product of the merging of two large competitors, Lawyers Title and the Commonwealth family of companies, in February of 1998.
As mergers go, this one went quite well, as CEO Charlie Foster describes: "There were some good cultural fits, and we brought them together. We went through a year of a robust economy, which helped, but then the world had been changing and continued to change. I believe our entire management team was looking for more cohesion than we had been able to articulate. We completed a lot of projects with regard to the merger and systems, and organizational structures needed to be changed, but we weren’t sending a consistent internal message regarding growth strategies in the face of emerging technologies. We were just saying, here we're two companies that used to do something individually, how do we do it together? We got by that. Then there was a company-wide hunger, this need, this management imperative, to be clearer about the future."
In addition, there was a pressing need to deal with some fundamental shifts in the industry. Other mergers. The effects of the Internet. The very nature of how real estate transactions were being done. How would they react? Could they find a way not to be reactive, but to be more in charge of their own destiny?
As Foster explains, "It really boiled down to the competitive environment. What was going on in the industry? How were real estate transactions being completed? The mortgage originators began to behave differently because of consolidations and capabilities afforded them through the Internet. There were consolidations going on in our industry and talk of further consolidation. But the state of our business really had to be characterized as one that was more reactive than proactive. We were dealing with the world as it was shifting, and responding to it. Before starting the Strategic Thinking Process, I think that's a fair characterization."
Adds Senior Executive Vice President Ted Chandler, "We began to see the limitations of our historical focus on being a single-product vendor of title insurance. We were concerned that this singular focus in a rapidly shifting market positioned us more on the periphery of the action than we used to be, and than we wanted to be. We saw the opportunities, but we were not clear on how we should alter our positioning to take advantage of them."
The management team decided to look for objective outside assistance to work out a strategy. But unsatisfactory results from previous encounters with "traditional" content-based consultants led them to look for another solution. DPI's Strategic Thinking Process seemed to fit their needs.
"We first concluded that we would like to have a facilitator-enhanced process," Chandler says. "We had experience with consultants that came in and attempted to provide domain expertise, but we knew that the real answers were locked up within us. We were looking for a set of professionals who could help us pull those ideas out. Really, the DPI Process, led by a facilitator who transfers the process skills that you need to continue and give momentum to the process, was exactly what we were looking for."
Adds Charlie Foster, "If I could characterize it another way, we were responding to the outside world, including our shareholders and the investment community. And we were, I guess fairly, self-assessing ourselves as having a lack of clarity. And we needed a clarity of purpose first of all -- what it is we wanted to do, what our mission really should be -- and then clarity of thought as to how to approach that goal, that objective of getting the purpose. So we were looking for more of a discipline, something that would be continuous, not the answer by the guru du jour."
They gathered a LandAmerica management team from a cross-section of locations and disciplines, twenty-five in all, to participate. Right from the start the Strategic Thinking concept clicked.
"The reaction from our people was very positive," Chandler says. "I think there was a desire for this. We, like most companies, had a strategy. We were executing on a strategy, but it tended to be more of an implicit strategy that was not being aggressively communicated beyond the executive suite. And the reason is, as Charlie said, there was a bit of a lack of clarity as to how boldly we should be taking advantage of these opportunities. When we brought our people together for the work session, I think there was a real buy-in that it was appropriate, and needed."Despite the fact that the participants had come from many parts of the company and country, the process quickly got them on the same page and moving toward a surprising conclusion. It became immediately apparent that the company might make a major change of direction, and Driving Force -- creating an opportunity to drastically change the game in their sandbox.
As Chandler explains, "Because this business is largely locally-driven and because real estate laws are different, and customs and practices are different, when you pull these people together, you find that it takes a while to talk the same language. This is because the business, even though it's under the rubric of title insurance, is actually executed differently depending on your geographic market. So the effort to identify the Driving Force brought on a lot of discussion. And we actually, I think, are unusual among companies that have gone through the DPI process because we have changed our Driving Force. After we identified our current Driving Force as Product -- title insurance policies -- we realized we could really change the game if we moved to a new Driving Force -- User Class."
To put a finer point on it, they would be moving away from being simply a title insurance company, and moving toward providing a wide range of services, all related to the real estate transaction. Instead of selling a single piece of the puzzle, they would eventually manage the entire transaction -- a radically different business model.
"The simple truth of the matter," says Charlie Foster, "is that we had been very oriented towards something called a title insurance policy, which, if you peeled it back, had 95% information value versus 5% insurance value. But our current thesis is to try to respond to what the customer really wants. And the customer, no matter if it's a lender or a realtor, a builder-developer or an attorney -- our basic customer sets -- what we think they want is a facilitated transaction, not just the title insurance. And so we're putting ourselves in a position to be that concierge, to be the facilitator, to provide that seamless transaction. And we're starting to call ourselves a transaction manager, as a simple phrase, as opposed to a title insurance fulfiller."
" The primary piece of it is that we had to get away from thinking of ourselves as just a title insurance company," Chandler says. "So our sandbox is that we proactively provide services in the information, assurance, fiduciary, and settlement segments of the real estate business. And we intend to be the preeminent provider of seamless transactions and value-added knowledge through economical, time sensitive, and customized solutions. That combined statement of our future strategic profile does a number of things. It focuses people on the fact that when we talk about information, assurance, fiduciary, and settlement, then title insurance tucks into assurance. It's just one of a series of guarantee products that we can provide. And when we speak to a sandbox that encompasses providing the information needs of the real estate industry, we're talking about, in fact, a very large market opportunity. That articulation of the sandbox and aggressive development of multiple products in that area coupled with our intent to be the preeminent provider of seamless transactions, leads us into an e-Strategy emphasis and the need to build a different profile than we had been pursuing."
A change of Driving Force mandates a corresponding change in the Areas of Excellence to be developed and nurtured. LandAmerica's people do not perceive this to be a major problem, as these areas are not entirely new to the company's culture. It simply means a change of emphasis.
As Chandler sees it, "Our main Area of Excellence is Market Knowledge, which is really an aggregation of local market knowledge. To support that, we will also need to concentrate more on Information Management and Technology. Even though we're in the 'insurance business,' that is very much misleading. We're an information management company, and that is really our business. And then, thirdly, is Internet Technology, and that is a skill set, not just purchased goods. It is an area of focus, and it is highlighted under our future strategic profile management because we need to leverage it to a significantly greater degree."
To get their arms around the role that the Internet might play in the future, they decided to use DPI's e-Strategy Process, again with surprising results.
Says Foster, "We didn't realize, going in, the kinds of things we'd come up with and how central they would be to our new strategy. I looked at it as a scenario of, 'Gee, I don't know enough; this is education. Let's do it!' You know, you have these natural anxieties and fears that somebody knows something you don't know. So that's why we went into that process. The almost immediate outcome was that now we don't even call this e-Strategy. This is just strategy. It was its own separate project at the outset. In fact now it's one of our major Critical Issues to the overall development of strategy. So we're attempting to learn and to build and develop strategy based upon what I call the evolution of Internet-based commerce.
"We had, in our previous, fragmented approach to the Internet, responded to one of our customer sets by building a part of our company, which we called LandAmerica One-Stop, to try to respond to what the customer was saying. But we were doing it looking through the eyeglasses of a title insurer. So we hadn't thought of everything. In fact, we weren't, from a technology standpoint, very far along in terms of connectivity. We had struggled with that. Because of the DPI Process we immediately recognized the need to look at it in the broader context."
That broader context, of course, was the new, more expansive strategy the company had embarked on. Given that their products are essentially information products and that the thousands of potential customers are located literally everywhere, e- commerce would play a central role as the concept developed.
The e-Strategy Process allowed them to create a realistic and comprehensive design for an e-commerce solution that would precisely fit their new business model -- complete with definitions of specific applications and their requirements. What really made the whole e-commerce concept gel, though, was the transformation they saw take place through the "Killer.com" segment of the process.
"Part of what we had done during the Process was to engage ourselves in two or three exercises. But one of them was much more than an exercise, it was something about building a whole new model. And through Killer.Com we came up with an approach that turned the light on and said, you know, this sounds exotic, but it really is what we're trying to do. It's just a way of explaining it, of giving it a complete definition," Foster states.
The result is the game-changing "Transaction Manager" concept brought to market, in part, by the Internet portal described in more detail in Mike Robert's book, e-Strategy Pure and Simple. This breakthrough model will take years to bring to fruition, but LandAmerica wasted no time getting started. Within weeks, they made a strategic acquisition that would supply a critical piece of the new business.
Chandler explains: "We, almost immediately out of the box, once our future strategic profile was set, and the strategic filter was delivered, applied that filter to several pressing opportunities. We zeroed in on this one particular target company called Primis. We very boldly acquired the company, and we have incorporated that business into one of our most important market segments. So there was this absolute direct, not indirect, linkage between the development of that Strategic Filter and us pulling the trigger on a major initiative.
"Primis embodies our movement into this transaction management space in a key market segment. What we got with that company was a whole array of valuation products we were not offering and market knowledge of where innovation was needed. We also were able to get technology that was specific to those products. But what we had, and what we saw, and what has proved out is that the acquired technology was readily adaptable to be our primary e-commerce front-end with respect to this one very large market segment. So when we bought Primis we merged it into one of our companies that was operating in the same market but didn't have the same set of tools. And, combined, we are very, very well positioned to be the transaction manager for our largest, most demanding customers.
"I can actually say, unequivocally, that we would not have bought Primis but for the DPI Process. I mean that just flat out, because prior to DPI, we were not looking to expand into, essentially, another line of business -- the valuation products line of business. And even if we had been, we would not have done it at this level of financial commitment."
Because of the complexity of the new LandAmerica business model, it will take some time to develop it and mold it into a complete, integrated operation. Primis is an important piece of the puzzle. Yet despite the challenges inherent in creating a new game, Foster and his team are confident that the concept is sound and that the market is moving toward using this type of service. The journey has also completely changed their perception of the game, the rules and the nature of competition in their sand box.
"We haven't completed them yet," says Chandler, "but the transaction management tactics that we're bringing to the table will have the effect of changing the rules. We're doing business in a way that's different than any of our natural competitors. We are actually, counter-intuitively positioning ourselves so that we will even sell our competitors' products. We are moving into the transaction intersection to manage the transaction, and, if our customer wants to use our competitor for the title order, then we're going to do that. So what changes the rules of play is that all of a sudden when a customer chooses us, they're not making a choice on one major title company versus another major title company where the differences across the country may not always be apparent, or real. They're making a choice that they want a manager of that transaction who will then use the fulfillment entities that are best in class -- best in class being defined by the customer or in the absence of being defined by the customer, defined as quicker, better, cheaper. This will fundamentally change the game and the rules of play because we do not see our other traditional competitors positioning themselves in a way that they would forego the title insurance order.
"As a result, we are less obsessed with our traditional competitors than we were before. I think one of the benefits of going through the Process is that you become more confident in the direction of the company and therefore you're less reactive to their 'me-too' type strategies. And the other piece of this is that we recognize that our traditional competitors in this brave new world are perhaps not our real competitors. That comes out of the Killer.Com evaluation. So we are much more going to go in our own direction, full of 'competitors be damned,' than we were prior to the DPI Process."Throughout the next couple of years, a new type of company will emerge, although pieces of the model may change as ideas are tested and adjusted to fit the evolving marketplace.
Says CEO Foster, "We have come up with what we think is a pretty good game plan. Now it isn't proven out and it changes from time to time. In fact one of the beauties of this whole DPI effort is the fact that it is a continuum. Strategic thinking is just that, a continuum of thinking."
Where would they be had they continued on their former course?
Foster puts it succinctly: "We probably would have been much more on the target end of the range than the shooting end."
