"Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat. Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win. Opportunities multiply as they are seized." – Sun Tzu
Sun Tzu was a military strategist famous for his military treatise, The Art of War. While I hesitate to compare the attack we are facing as an industry to military action, and in no way want to demean the efforts of the brave men and women who fight for our freedom, there is no doubt that we can learn from his teachings.
We are an industry under attack. Of course, it’s not the first attack we’ve faced. We’ve faced the threat of “Hillary Care,” Elliott Spitzer, direct writers and the Internet – to name a few. As different as the earlier attacks may seem on the surface, the way we responded as an industry was almost identical to each. That response was actually a non-response; we sat back, did a little hand wringing, changed very little about how we work and hoped that it would pass without a fatal blow. Largely, that strategy worked.
However, it won’t work that way this time around. This attack is different: it’s real, it’s sustainable and will produce casualties. To say the least, it has put our industry into crisis mode. And when a crisis hits any industry, competition becomes fierce. Survival is no longer the result of a passive act. As is one of the fundamental laws of survival, you have two options: fight or flight.
Some are going to abandon the very industry that has provided such amazing opportunities and, I will argue, whose greatest opportunities still lie ahead. They are convinced that government exchanges, reduced commissions and employers’ decisions to stop offering benefits has made this an apocalyptic moment. That’s unfortunate for them, but I guess if all you see is yourself as a victim of events beyond your control, flight is the only viable option.
Actually, the fact that there will be a fair amount of flight is part of what helps produce so many opportunities for those who remain, for those who choose to stay and fight. For those of you willing to fight for your future, there is one additional question: How are you going to do battle? Are you going to wage a tactical war or a war of strategy?
Unfortunately, this seems to be the battle cry of too many producers and agencies. They see their current business model threatened and just start swinging wildly. Below are some of the swings I see producers/agencies taking:
Buying books of business – This is akin to the manufacturer who says, “I know I lose money on every widget, but I’ll make up for it in volume.” If your current model is being threatened, just making it bigger isn’t the answer.
Moving into P&C – Those who take this tactic are making themselves more of a generalist and prone to further attack by the specialists. Specialists will always generate more value than a generalist. If you agree that your future has you getting paid for the value you create rather than the product you place, becoming more of a generalist takes you in the wrong direction.
Doing more for less – In an attempt to be more attractive, they start throwing more “free stuff” into their offering, further reducing their profit margin. If what you offer has any value, shouldn’t you get paid for it?
Even when you are swinging wildly you may connect with a few punches, maybe even win a battle. However, swinging wildly quickly becomes exhausting and soon makes you even more vulnerable. Until you create a solid foundation in your area of core focus, going in new directions is only going to create greater instability. Some of these tactics may be part of a long term solution, but only once the core is solid and they are determined to fit into a larger, overall strategy.
When the “fight” instinct kicks in, it’s difficult to subdue the urge to start swinging wildly and to, instead, take time to size up the opponent (in this case the threat to the survival of your business model). Planning a long-term strategy, while feeling like it initially slows you down, is the only way to create a solid foundation, ensure your long-term survival and provide an ability to take advantage of the coming opportunities. Ultimately, it is the only way you can have any endurance along with your speed.
Having a plan means you have clarity in three key areas: current situation, vision and business needs.
Current situation – Describe your current business model. This may be difficult, but you have to be brutally honest. Actually, the difficult part will likely be seeing just how vulnerable to an attack you really are.
- What are you selling? (likely answer – insurance)
- How are you getting paid? (likely answer – carrier commissions)
- To whom are you selling? (likely answer – anyone who will buy)
- How are you acquiring new clients? (likely answer – quoting and hoping for lower numbers)
- What is your growth rate? (likely answer – much less than it was)
- How do you protect your profit margin? (likely answer – cross our fingers)
Vision – Now, answer those same questions again, but this time in terms of your future vision. I’m not talking about a mission statement-type vision, I’m talking about what your model needs to look like in the future. Take yourself out three years and picture that your model has grown to be exactly what you want and need. What does it look like, ideally?
- What are you selling? (possible answer – broad based solutions that impact our clients’ business bottom line)
- How are you getting paid? (possible answer – fees based on the value we are able to create)
- To whom are you selling? (possible answer – companies who fit our ideal profile and value what we have to offer)
- How are you acquiring new clients? (possible answer – by creating a plan that aligns what we have to offer with what our clients need)
- What is your growth rate? (possible answer – predictable, sustainable, and top among our peer group)
- How do you protect your profit margin? (possible answer – establish fees based on the effort/cost involved with each client)
Business needs – Once you have a true understanding of where you are and can clearly see where you are going, its time to determine how to connect those two points. Be sure you address the following:
- What new skills do I need to develop?
- What resources (outside partners, team members, solutions, etc.) do I need to procure?
- How will my sales process need to change?
- How will I need to alter my brand message?
Next, for each business need:
- Identify key initiatives and specific action items to which you must commit
- Set deadlines, as appropriate
- Communicate your plan to team members
- Empower your team to take ownership and contribute
- Monitor your progress and make adjustments, as necessary
Yes, we are an industry under attack. A passive response will be a concession of defeat. It’s time to choose: fight or flight. For those who choose to go to battle, you must choose a battle plan. Swinging wildly may be instinctive, but you will connect with precious few of those shots and can never ensure your ability to connect a second time. However, if you slow down for a moment, create the appropriate strategy and a disciplined plan of attack, you will look back at this “attack” as the time your business/career was liberated. You just have to ask yourself, “How badly do I want it?”
Photo by Kyle VanHorn.