In an earlier article, I mentioned the importance of continuing to build business acumen. For me, that includes a lot of reading. I read blogs, newspapers, periodical, books — you name it and it is probably on my reading list. There is something to be learned almost everywhere but once in a while you come across something that just speaks to you. Recently, for me, it was The Upside by Adrian Slywotzky.
The book focuses on how to turn the risks we face in our business into opportunities for our business. Of the possible risks faced by business, Slywotzky argues that strategic risks are the most dangerous. He states that “strategic risk comprises most of the total risk most companies face” and identifies seven major kinds of strategic risk. For each of the seven, I have identified where that risk may be affecting you.
Whether you are a producer, a department manager or an agency owner, I am challenging you to evaluate how many of these risks you are facing and make sure you are planning and executing accordingly.
1. Your big initiative fails. How effective are you at follow-through? Entrepreneurial individuals and organizations are notorious for chasing the next “best idea” only to get distracted with another new “best idea.” In the process, we lose momentum, credibility and opportunity. Any initiative can fail, but make sure failure isn’t because of your lack of attention and/or proper planning and execution. If you don’t properly evaluate opportunities, plan for successful implementation and make necessary adjustments along the way, then you are at risk.
2. Your customers leave you. Do you have great client retention? If you do, is it because you have just been fortunate, or is it the result of a specific retention strategy that you employ and know can be replicated? Perhaps even more important, are you keeping the wrong customers while the right ones leave? Maybe it isn’t even your customers leaving, but key employees. What are you doing to make sure you attract and retain both the ideal clients and employees? Do you have a plan in place? If not, then you are at risk.
3. Your industry reaches a fork in the road. Our industry is drastically different today than it was just a few years ago, and the pace of change is only going to increase. How are you planning for the future, a future filled with unknowns? Are you just hoping to survive or do you recognize change for what it is: an opportunity to leave your competition in the dust? If you are planning properly, you will thrive. If you aren’t proactively planning for how you will compete differently in the future, then you are at risk.
4. A seemingly unbeatable competitor arrives. Is your “unbeatable competitor” one of the large regional or national brokers starting to work in your target market? We all see the potential of an Obama health care plan being that “unbeatable competitor.” What are you going to do if one or both of these happen? Are you confident in your ability to compete? Is your value proposition so well defined that you can compete with anyone? Do you control the “product” you are selling or have you fallen into the traditional trap of merely being a middleman? If you don’t have a clear plan of how you will compete, survive and thrive in the ever-changing market, you are at risk.
5. Your brand loses power. Whether it’s as individuals, as a department or as an agency, we all have a brand; it’s only a matter of whether or not we are proactively controlling that brand. A brand is the clear, powerful thoughts that our audience has when they think of us. What is your brand? Is it positive? What are you doing to manage it? If you have a vision of what your brand is and a plan to build and communicate that brand, you will continue to stand out from your competition. If you allow your brand to just develop randomly, then you and your brand are at risk.
6. Your industry becomes a no-profit zone. What are the factors attacking your margin? Is it reduced commissions from the carriers? Is it the “free” value added services you provide to your clients? Is it the current economy? Is it having customers who demand more, but want to pay less? The number of factors that drive margin compression can be quite extensive. The key is having a plan to create new profit opportunities and to not be dependent on a product over which you have no control. If you have a clear understanding of how to truly add value to your client’s business, increase the ROI on their HR/benefit investment and clearly help them become a better managed business, you will remain profitable. If all you deliver is an insurance policy and some value-added services, then you are at risk.
7. Your company stops growing. This is a phenomenon that happens within individual books of business, as well as at both the department and agency level. To push beyond these plateaus, we have to continually monitor, measure and adjust the way we work. Unfortunately, increasing the number of hours you work does not necessarily equate to increased revenue. However, if you have the proper plan in place, you can actually increase your income with the same, or even less, effort than it takes today. If you think you can just “work harder” instead of smarter, then you are at risk.
As a producer, manager of a department or owner of an agency, it isn’t a matter of if you will face one of these risks, it’s a matter of which one(s) and when it will happen. The key is to prepare for the inevitable. Be aware of where your potential risks lie in each of these areas, know what it looks like, and have a plan for how you can either prevent it entirely or — at the very least — mitigate its impact.
This level of preparation takes focused time and effort, but it is critical to your continued success. How bad do you want it?