Clearly things had to change. And they did. When management transitioned in 1997, Ben Salzmann's charge was to create a focus on "profitable growth, where the word profit came through," as Salzmann puts it. This called for very fundamental changes in the way business was done, relationships with agents, product offerings, the very culture of the company. To help develop a clear direction among the management team, they decided to bring in an outside firm to help them create a new strategy.
"We brought in about a half dozen planning companies at least twice on site. We did reference checks. We went through their methodologies. If they wrote books we bought the books, read them, critiqued them. We created, I would say, a 500-page three-ring binder comparing content planning versus process and then critiquing the various consultants. What we liked about DPI was that while they had an academically justifiable process they didn't get lost in academia. In all of their books and materials they immediately took the theory and made it very pragmatic, constantly tying their methodology into case studies with real results. We had the full professors with Ph.D.s from the various big business schools in here talking about content planning, with their incredible rhetoric. But we kept saying, 'Show us your clients and what you actually did for them. And show us how it made a difference within their industries.' Whereas every piece of material from DPI said, 'This is our client in this industry. This is how our process helped them find another way to conduct their business. And this is how it benefited them. DPI kept tying the theory and processes back into real cases of clients in the practical business environment and the end results they achieved.
"We also learned the difference between content and process strategy consultants. With DPI we do the thinking using their process. Content planners arrive with the most recent Spring graduates and one semi-seasoned planner who's billed out at a horrific rate. They come in and do 'meatball surgery.' They leave you to figure out what to do next. With DPI we create the strategy and there's a clear timetable and responsibilities for implementation. It just made more sense to us. With DPI we also knew we would be working with an experienced veteran, Mark Thompson. He commands your attention and our officers respected him. A lot of strategic planners don't get that kind of respect because their methodologies don't work and their strategies never get implemented."
ACUITY's management assembled a team from across the company to go through the process.
"Mark told us we needed to have representation from throughout the company to get the maximum buy-in. We had been building a culture that involves people in decision-making so that immediately dovetailed with who we are. He also said, 'Look for rising stars, such as an underwriter who you see growing with the company. They bring frontline exposure. Take advantage of that.' Those things matched our culture. It was a natural fit."
As the process progressed in the first three-day session, a major revelation emerged that would lead to significant shifts in how the company did business. After extensive debate over the company's Driving Force, the team realized that they had been Distribution-driven by default. In other words, the distribution system--its agents, and actually only a portion of them--were dictating everything from product development to commission structure to geographic reach.
As Salzmann recalls, "We had a very strong debate over whether we should be Distribution-driven--where it is the agent that drives us--or whether we should be Product/Service-driven. We were defaulting under previous management to giving away the selection of future products and marketing and sales to our agents. That doesn't mean we don't value our agents, we do. They are our lifeblood, a vital link to our customers. We listen to them very carefully. But we should be developing the products because that's our expertise, and we underwrite the risk.
"The agents' job is to bring us together with potential insureds. But we had been listening to anecdotal evidence from individual agents and developing products that the majority of agents didn't want. An agent might also say, 'I'm on the border of this particular state and I want to write business there,' and we'd go into a new state without ever looking to see if that would be profitable for us. We should have been doing the research across many agents, and across the marketplace to develop products that meet the needs of the majority of agents--and us. In the end, as a result of recognizing our Product/Service Driving Force, we decided to completely reorient the organization, taking back ownership of marketing, sales, product development, communications."
Out of the process came a list of eight Critical Issues that would begin to make this major change in their business.
Issues such as increasing the pace of e-commerce, taking ownership of marketing and sales, customer-direct service, data utilization--even a communications program that involved changing the company name to signify the depth of changes taking place--were created and assigned to individuals to manage to completion.
One of the Critical Issues involved moving the responsibility for service from the agents back to ACUITY. This has accomplished two ends. It relieves agents of a complex task for which they are not compensated, and also provides a means for ACUITY to create direct links to its customers strengthening those relationships, developing brand loyalty. Most of all it enables ACUITY to leverage an Area of Excellence it now nurtures to support its Driving Force.
"Superior service in insurance isn't just getting the customer something faster," Salzmann explains. "Superior service means things like helping your customer with loss control. You could save 8% this year by going with Acme, and have more losses and wind up paying 30% more in premiums the following year. We now help commercial customers to reduce losses, which lowers their premiums. That's just one of the ways we can provide value-added service and really please the customer."
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