The life of an insurance industry CIO is a precarious one at best, but are CIOs contributing to their own precariousness? In some cases the answer is an emphatic yes.

First, the good news.

The industry is slowly but surely emerging from several years of soft pricing, diminishing profitability, and expense containment. As the economy recovers, enthusiasm and budgets for innovations, upgrades, and efficiencies are on the rise. Large-scale IT initiatives that have been on the shelf for the past two or three years are being dusted off and readied for activation. The industry has recognized the value and benefits derived from the appropriate use of technology as a business enabler.

Now the not-so-good news.

While this generally bodes well for insurance CIOs and their divisions, these trends actually increase the precariousness of the times. They put a lot of pressure on CIOs to essentially make up for lost time. CIOs today are mightily tempted to make big promises they probably can’t keep. The trail of CIO tears is strewn with those whose eyes were bigger than their ability to deliver, and many a promising CIO career has been dashed by such overzealousness. The problem is that while the industry’s appetite for new technology has begun to increase the fundamentals required to successfully execute and implement enterprise-scale IT initiatives have not decreased, and may have actually increased in magnitudes of difficulty over the past few years.

The Reality

And why might that be true? For starters, vendor-provided core and ancillary insurance systems have made welcome functionality and configurability advances over the past several years, but many of these systems pose massive integration challenges for most insurers. The kinds of skills required to accomplish these integrations are in short supply in most insurance IT divisions, and many of the newer vendors to the space have wisely stayed away from offering integration or even implementation services, instead focusing on advancing their product’s capabilities. That leaves many insurers at the mercy of third-party integrators and implementers whose business models don’t necessarily align with the effective and efficient implementation of these systems.

Another reason that implementing pent-up IT initiatives may prove more difficult is a fairly simple one, but nevertheless true – insurers have not done it in a while. Skilled program management is no different than skeet shooting, drawing and painting, or even writing, in one very important sense, and that is that practice makes perfect. Many insurance IT divisions have been in ‘maintenance mode’ at least the past few years, and are therefore a little out of practice when it comes to the high-pressure stakes of implementing complex software platforms. In truth, many insurers struggled with this before the economic lull, and those struggles have not been somehow magically remedied now that insurers are ready to put the pedal to the metal.

All of this and more leads to the current state of precariousness for insurance CIOs. While the temptation is to race full-speed ahead, such an approach could lead to the career-damaging spiral of overpromising and under-delivering.

That is why it is more important than ever in 2013 for insurance CIOs to take a breath and focus on the one thing that will be more important than anything else this year – courageous leadership. And what is courageous leadership in the context of the job of an insurance CIO? Let’s keep the definition simple – it is the courage to say what is and is not possible, how long it will (really) take and how much it will (really) cost, and what is (really) required of their business partners in terms of resources and commitment.

Easy to say and very difficult to do! So let’s consider a couple of alternate hypothetical paths for insurance CIOs in 2013 and see how they play out. In both scenarios, a CIO at a mid- to large-sized insurance carrier has awakened in 2013 to the reality that the current state of the carrier’s core systems is antiquated, that the carrier’s internal and external customers are not happy with the functionality they have, and that the carrier’s competitors seem to be moving ahead of them from both a technological and customer-experience perspective.

Scenario Number One

In the first scenario, the CIO moves forward with a business-requirements gap analysis, an IT roadmap update-and-match to strategic business objectives, and a technology market review of potential options for modernization performed by a consulting company.

The CIO reviews the consultants’ findings and recommendations and agrees with the need to move forward. This requires a myriad of activities, not the least of which is creating and promoting the required budget, assessing the IT division’s capabilities and thus its chances of successfully pulling it off, and beginning the thankless task of creating and managing appropriate executive and customer expectations based on the answers uncovered in the previous tasks.

This is precisely the point where courageous leadership is required, and it’s here where our CIO missteps. When the consultants’ plans and estimates seem too good to be true, particularly when matched against the track record and capabilities of the IT division, it’s because they are! Rather than swallowing hard and fighting that battle though, this CIO supports the consultant’s recommendations to his peers and the board and begins down what becomes the inexorable path toward overpromising and under-delivering, primarily as a political expediency. The die is cast for this CIO.

Just six months after program initiation, it is clear to all interested parties that the initiative is behind schedule as the internal IT division struggles to hold up its day-to-day responsibilities and its modernization responsibilities, and their internal customers resist the kind of cultural and process change required to implement the new platforms.

And the consultants? They of course recommend bringing on additional resources immediately, and reworking the program plan before the ink on the original plan is completely dry. The bottom-line result of all of this, besides the obvious expense overruns and lost opportunity costs in the marketplace, is reduced credibility and trust for the CIO, something that once lost is almost never recovered.

Scenario Number Two

In the second scenario, all of the same things occur up-front in the process. But as the CIO reviews the options and suggested plans, he or she realizes that the necessary modernization program, if done correctly, will be a long and arduous journey. It will take some courageous leadership to communicate this reality to the stakeholders, as it will not necessarily be what they want to hear.

This is where the rubber hits the road, and the notion of under-promise and over-deliver come to mind. In this scenario our CIO carefully manages the expectations of the stakeholders by taking the time to thoughtfully and forthrightly communicate the challenges, costs, and timelines necessary to execute the initiative. This is no small feat, and requires tact, sensitivity, and a large dose of self-criticality. Importantly, it’s not that the initiative can’t be successfully executed; it’s that it will be hard to do, with many setbacks and challenges. Effectively communicating this not only requires a healthy dose of courageous leadership, it also happens to be part of the job of being a CIO and a member of the executive team.

Having done this, our CIO takes some short-term political heat for not delivering the new functionality as quickly as some might like, but over the long term this CIO has responsibly managed the expectations and resources of the organization to deliver what is necessary. This approach avoids the pitfalls of declining trust and credibility as in the first scenario, and in fact sets this CIO up for future successes and perhaps even career growth.

The Lesson

And while certainly difficult, it’s much easier to communicate and manage expectations up front than it is after the fact when milestones have been missed and costs have begun to spiral. Done correctly, communicating and managing expectations builds credibility, trust, and confidence at the executive level. The reality is that these are complex problems with no easy or simple answers or solutions. (President Kennedy once said we choose to take up great challenges “not because they are easy, but because they are hard.”) It takes real work and sweat equity to produce and implement working software that effectively and efficiently serves the needs of the organization.

Most importantly though, it takes courageous leadership.

Formerly CIO at Amerisure, Frank Petersmark is CIO Advocate at X by 2, a Farmington Hills, Mich.-based technology company specializing in software and data architecture and transformation projects for the insurance industry. He can be reached at Fpetersmark@xby2.com.

The post The Great Insurance CIO Differentiator in 2013: Courageous Leadership appeared first on Journal of Insurance Operations.

Gentlemen, we can rebuild him. We have the technology. We have the capability to make the world’s first bionic man. Steve Austin will be that man. Better than he was before. Better … stronger … faster. (The Six Million Dollar Man)

This just in: Thanks to science, we no longer need to view human beings as complex creatures. We no longer need to view human nature as cryptic or complicated. Anfractuous behavioral lines can now become — if not perfectly straight — at least malleable; and, so, outcomes can be predictable. And all of this can be accomplished with tools long since at our disposal, staples of navigators and family vacationers everywhere. Got it? No? Come on, now. Have you no imagination? It’s maps. That’s right. Maps. Better yet, there’s an app for them.

We Have the Technology

Referring to the topics of some of the post that appear in this blog, readers of The Front Line often inquire, “Where do you come up with this stuff?” Since I’m a firm believer in giving credit where it’s due, in this case, I got it from Marc Effron because he was kind and generous enough to have shared his momentous organizational-behavioral breakthrough in this promotional screed disguised as an article. Ya gotta hand it to the guy: If one of the jobs of marketing is to make the complex simple (it is), Effron has resolved all of the complex vagaries in the entire history of humanity, behaviorology, job training, and leadership in three simple tenets. And just in case we’re as obtuse as he thinks we are, he even reminds us that the whole shebang is simple:

First, we know that better quality talent – in key roles – delivers better business results. This implies that there’s potential value in activities that improve talent quality. Of course that value must be measured against the effort that activity requires. Second, we know that our customer – the executive team – wants talent that’s proven effective and available now. Third, we know that experiences accelerate development and demonstrate a leader’s capabilities. If properly applied, experiences will give our customers better talent faster. Those combined facts suggest a rather straightforward solution to improve talent development: To get our customers better quality talent faster, give key talent powerful experiences using the most efficient possible process. Simple.

See? Simple.

When you look at it Effron’s way, it’s humiliatingly apparent that the scientific, academic, and organizational communities have been whiffing on this thing for centuries. It beggars comprehension that so many of us have been so unable to fathom human nature and its attendantly capricious cachets for so long. Or maybe that’s a tad harsh. Maybe it’s just that, before the advent of the smart phone, we never should have expected to understand human behavior in the first place. All we had to do was wait for the technology and create the map.

Think of It

The possibilities are imagination-defying. Consider: On the second morning of your vacation, you’re sitting on the beach at Kamalame Cay in the Bahamas. Just as you reach for the thermos full of Bloody Marys for a refill, Screwworm from HR calls your iPhone. Smiling slyly at your companion, you answer with your cheeriest, albeit half-in-the chute voice: “Good morning, Screwy! I was just thinking about you.” In his usual amiable tone, Screwworm says, “Cut the crap, Shmidlap. Ya know that clown, Albert Murfwhiffle, you assigned to run the marketing department? It turns out he’s never even been part of a creative team before. What the hell kind of map did you create for him? We gotta get this yo-yo in shape before The Big Guy finds out.”

Chivalrously refilling the glasses of you and your companion with a felicitous smile that belies your assertive state of mind, you boldly reassure Screwworm: “No sweat, Screwy. I’ll just re-direct Murfwhiffle’s sorry keister through Marketing Training. We’ll have him back in charge so fast we won’t even have to change his title. The Big Guy’ll never even know. And if, by some chance, our revenue numbers dip in the meantime, we’ll just blame it on the maps Needleman created for the deadwood in his sales department. Don’t worry, Dude. Vespucci’s got nothin’ on me.” By the time Screwy asks, “Who?” you’ve already ended the call, opened your map app, and re-routed Murfwhiffle through Marketing Training. Then you lie back in your chaise, slurp your Bloody, and contentedly munch on your celery stalk.

The Journey Ends

Try to imagine what a boon this will be for our brands: Don’t have the time or resources to find the best talent? No problem. We’ll just map ‘em to productive perfection. Want to use a transactional web or mobile application to recruit, process, and hire candidates online, sight unseen, without all the muss and fuss of … you know … actually meeting and getting to know people? Not to worry. We’ll just map the wheat from the chaff after we get ‘em on board. Favor nurture over nature in the perennial behaviorological debate? Cool. Who cares who they are or where they came from, for goodness’ sake? We can map ‘em till we scrap ‘em. After all, we can’t keep even the best-mapped leaders forever, right?

Yes. We have the technology. By reducing people to binary data, we have the capability to make perfect leaders. All our employees can become those leaders. Better than they were before. Better … smarter … more capable. And we can do it all with our toes in the water and our heads in the clouds. These are the kinds of things that make Pink Floyd seem positively prescient:

Forward he cried from the rear,
and the front rank died.
The General sat, and the lines on the map
moved from side to side.

God help us.

The post He Blinded Me With Science appeared first on Journal of Insurance Operations.

“It can scarcely be denied that the supreme goal of all theory is to make the irreducible basic elements as simple and as few as possible without having to surrender the adequate representation of a single datum of experience.” [emphasis added]

Recently, I visited a client who had requested an evaluation of his existing technology stack to determine whether it could support a significant surge in growth. “We’re expecting revenue to triple over the next seven years,” he pronounced, “and we need to know whether we have the technology in place to handle that sort of increase.”

“Well,” I began. “Have you considered your operations and the underlying processes? And your staffing? Shouldn’t those be evaluated as well?” I asked, helpfully (or so I thought).

“Nah. That’d be overkill for us. We just need to know if our systems can handle the increased loads.”

“For  every complex problem there is an answer that is clear, simple, and wrong.” –  H. L. Mencken

Contemplatively, I began, “Seven years from now, having opined positively on the viability of your systems to support a threefold increase in revenue, I deign to consider being thrown under the bus because I failed to predict the outcome of the Big Game even though I meticulously evaluated the fabric used to create each of the competing teams’ uniforms.”

But that was just in my head. I actually said, “Well, we just can’t render an opinion until we evaluate those other areas, and while much larger companies have been successful using the same technology, surely, you understand their circumstances were different?”

“That’s ok,” the gentleman reassured, “it would really be too much for us right now to do a full-blown assessment. If larger companies are using the same set up, I got the answer I needed.”

He paused a beat.

“And I’m just fine with that.”

“Gotcha,” I said, chagrined, holding my tongue, heading out the door. “Nice to see you.”

So off I went to travel the thousands of miles back home, leaving behind a senior manager in charge of a pile of stuff he was now confident could support his much greater ambitions. How costly that hasty conclusion might be in the long run remains to be seen. But of this I’m certain: ascertaining the viability of one part of an organization does not validate the viability of the whole – something so obvious or self-evident as to be hardly worth mentioning. Though I mentioned it anyway. That’s my job.

Singling out technology to affirm an organization’s ability to support unusually rapid growth is about as useful as evaluating a Jeep’s tires to affirm its fitness to climb Mount Everest. What of those data representing people, their skills and availability? The principles, policies and frameworks that underpin the organization? The operational processes that yield the outputs upon which internal and external customers rely? The very structure of the organization that can, and often does, stand in the way of critical growth initiatives? Are these, together with the technologies employed, not the irreducible basic elements of any organization? And isn’t ignoring them akin to surrendering the adequate representation of multiple data of experience, and not just a single datum?

*             *             *

We in this consulting profession sometimes suffer at the hands of those who hear what they want to hear and once they hear it want to hear nothing more. I suppose it goes with the territory; not all of our clients will see us as the trusted advisors we yearn to be. And while I may have failed to convince my client this time, I’m consoled by the fact that Albert Einstein agrees with me.

And I’m just fine with that.

The post Modo Hoc appeared first on Journal of Insurance Operations.

As readers of The Front Line know, I had surgery on my right shoulder on February 7. On October 30 of last year, while trying to push two trees Hurricane Sandy had dropped from my elderly, next-door neighbors’ driveway (Mary’s a sprightly 70, Charlie’s an ailing 85), I’d felt a bolt of lightning that extended from the top of the shoulder to the tips of my fingers. Recognizing that almost immediately as a bad sign (and people say I’m slow), I ceased and desisted, heading off in search of hot coffee, since Sandy had also managed to take our electricity with her.

Part the First

After giving it enough time to determine the injury wouldn’t heal on its own, I saw an orthopedic surgeon who ordered an MRI. The MRI revealed what appeared to be a torn rotator cuff, along with a partially ruptured tendon from the long head of my right biceps. The plan was to perform two procedures — repair of the torn rotator cuff and re-attachment of the ruptured biceps tendon (a procedure called tenodesis) — via arthroscopy.

However, when the surgeon entered my shoulder with the scope on February 7, he discovered two things: (1) There was no tear in the rotator cuff. (2) Between the time of the MRI and February 7, the biceps tendon had completely ruptured. With no tear to repair, and unable to find or retrieve the severed end of the tendon with the scope, the surgeon, nevertheless, spent an hour in my shoulder removing torn labral tissue, bone spurs and fragments, arthritic debris, and other sundry side-effects of 59 years of living and 30 years as a gym rat. He even gave me a video of the entire procedure for my viewing pleasure.

Later, the surgeon came into the recovery room to report to me — as I was still shaking off the effects of general anesthesia — what I reported in the preceding paragraph, albeit in significantly less detail; i.e., he said there’d been no rotator cuff tear, and he hadn’t reattached the biceps tendon. Then he headed off for his next case.

The News Sinks In

This put me in the classic good-news/bad-news situation. The good news was that, since no tear had been repaired in my shoulder, my recuperation period would be significantly foreshortened. The bad news was that, since the biceps tendon hadn’t been re-attached, I now had the condition referred to colloquially in the orthopedic lexicon as the Popeye Muscle. I eat as much spinach as the next guy, but I still had no desire to look like the boyfriend of Olive Oyl and the nemesis of Bluto.

It also put me into a profound funk. I’m not a guy who cottons to being compromised cosmetically or functionally. Does that amount to vanity? Perhaps. But with no intentions of abandoning my athletic pursuits, my yard work, or my predilection for sleeveless t-shirts in the summer, I was by no means prepared to look like a cartoon character.

And if I had occasion to wear anything other than a long-sleeved shirt, I certainly had no appetite for entertaining the inevitable question: “Dude! What the hell happened?” At this point in this post, I’ve written almost 550 words. Who’d want to go into that kind of explanation to assuage the curiosity of rude gawkers? Besides, if an injury resulted in physical deformity and dysfunction, who wouldn’t want it fixed? Yeah. I was bumming.

Part the Second

Since the surgeon had shown initial reluctance to perform the tenodesis, I brought myself to the conclusion that, after being unable to see or retrieve the biceps tendon with his scope, he’d simply opted to skip that part of the procedure. By the time I got to this office for the post-op visit, I was pretty steamed. But I got a grip o’ my knickers and kept my composure.

I calmly asked him why the biceps tendon hadn’t been repaired. He explained that he’d only equipped the operating room for arthroscopy on the day of the procedure. And he told me he’d have to perform a different procedure that would require my being in a different position on the table — and would also require opening my arm with a scalpel. He also said he’d be willing to perform the procedure if I wanted it done; although, some folks, he informed me, opt not to have it done.

He asked me to get physical therapy to help my shoulder regain range of motion and strength. And he asked me to come back and see him on March 26. Somewhat relieved, though not yet completely, I thanked the surgeon, left his office, went to PT as ordered, added some weight-training at home that he didn’t know about (which I now view as reckless), and went back on March 26.

On that day, he told me I’d already progressed to a point he expected I’d reach by mid-May. I smiled and asked, “Can I get my arm fixed now?” He, too, smiled and replied, “Ya know, there are some professional athletes who opt not to have that injury repaired. I said, “I know. Brett Favre actually opted to have his biceps tendon severed before his second season in Minnesota because a partial tear was causing pain in his throwing motion.” The surgeon said, “John Elway, too.”

Mustering my Irish sarcasm (the surgeon also is a Mick), I said, “Despite the uncanny resemblance, I’m not those guys. I want my arm fixed.” He laughed, said okay, and wrote an order for a procedure he called a sub-pectoral biceps tenodesis, which he performed on April 25. If you’re curious, you can see a CGI video of the procedure here. Since I didn’t require the arthroscopic portion of the procedure, fast forward to 1:30 for the relevant portion.

The Lights Go On

Today is 12 days since the second procedure. Everything I’d read about recuperating from it suggested I’d be in a sling for six to eight weeks. I’ve already stopped wearing it. As long as I don’t do anything stupid, I’m discomfort-free. The two-inch incision, closed with the surgical equivalent of Super Glue — no staples, no sutures, no tape — is healing almost miraculously. As I realized what was happening, when I saw my arm whole again and healing, and when I understood the surgeon had known things would proceed exactly this way all along, I felt humility and a twinge of guilt for having doubted him. (The photo to the right was taken just four days post-op.)

I saw him this morning for the first time post-op. I told him what I just told you. He smiled, as he always does. After telling me before the procedure I could be back on my bike in six to eight weeks, he told me I could start cycling again today. I see him again in six weeks, at which point, he said, “We’ll let you start beating yourself up.” (He was referring to weight training.) And he reminded me to take it easy, regardless of how good my arm feels. I won’t name him here. But I will recommend him highly and without hesitation to anyone who asks.

His conservative approach to surgery, his cautious approach to invasive processes that might not be absolutely necessary, and his patience with his impatient patient are all parts of his brand. I didn’t know it then. I know it indelibly now.

If there’s a next time, perhaps (I hope) I’ll be wiser, more patient, and less presumptuous.

The post Patience, Patient appeared first on Journal of Insurance Operations.

On the Air

In response to the popular acclaim accruing to Investigation Discovery (to say nothing of the copious advertising dollars), The Frontline Center for Shameless Opportunism will soon launch its own UHF satellite network: WWTF. Its programming, comprising case studies of brand management gone awry, will run the gamut from the irresponsible to the unwittingly criminal.

We’ll examine real-life cases from the Failed Business Files. We’ll marvel as people who wouldn’t attempt to construct a DYI storage shed from BJ’s Wholesale Club attempt to build their own commercially successful brands. And we’ll go undercover to crack the inner management circles in which decisions tantamount to business hara kiri are made with unknowing blitheness, misplaced bravado, and the haphazard failure to distinguish between entrepreneurial and kamikaze.

Pilot Episode

The first story will run in select test markets for the purpose of determining whether the lunacy it manifests is a regional/cultural phenomenon — or if it’s indicative of a larger anomaly that somehow has metastasized to epidemic proportions.

The investigation that spawned our first story was precipitated by an executive memo, leaked from the headquarters of a European company that had come to the United States to stage its first foray into the North American market. Nonplussed at first reading, The Frontline Center hired a team of forensic cryptologists that determined, after extensive study that included fingerprinting, luminol testing, and — as a last resort, reading — that the document, taken at face value, actually meant what it said.

Since the memo was, indeed, leaked — and since we’re compelled by professional duty to protect our confidential sources — we present here a paraphrased transcript of the executive-level discussion summarized in the memo:

Exec 1: Wow. These guys nailed it.
Exec 2: They sure did. Let’s get rid of ‘em.
Exec 1: What? They told us exactly what needs to be done.
Exec 2: Yeah. But we’ve never done those things before.
Exec 1: We’ve never worked in this market before!
Exec 2: Market shmarket. We’re executives, aren’t we? Nuke ‘em.

We readily concede that our immediate responses to the memo were thoughtlessly reflexive and perhaps unduly pragmatic: We rose as one from our chairs, moved as one to the window, pulled as one on the cord to raise the blinds, and noticed as one — almost right away — that we weren’t in Europe. Neither was the prospect.

We say “almost right away” because the moat that surrounds The Frontline Center uncannily resembles those that surrounded some Medieval castles in Europe; although, ours is stocked with rabidly starved pirañas, rather than your relatively benign crocodiles. Nevertheless, we sensed something was amiss.

The Back Story

Launching a comprehensive examination of the events surrounding this potentially fatal turn of events, our investigative team (or the I-Team, as we say in the biz) revealed that the company apparently had contacted a third-party brand-management and marketing-communication firm to establish its brand presence in North America, to position it optimally, to help introduce it to North American companies that were interested in its products and services through a process of integrated lead generation and prospect qualification, and to submit a proposal for said services.

Contrary to their expressed intent, however, what the European company apparently wanted was the brand-management and marketing-communication firm’s consultative strategic and tactical guidance without actually having to heed any of it. What the European company apparently wanted was a new approach to a new continental market without actually having to do anything new, different, or demonstrably more effective than what it had done before on another continent. What the European company apparently wanted was the opportunity to come to a new continental market, roughly three times the size of its old one, without actually having to do anything outside of its experiences or its proverbial, provincial, parochial comfort zones.

Get that? Neither did the folks on the I-Team.

Test the DNA

Without any means of solving this criminal conundrum, the I-Team opted to fire preemptively on all future cases; that is, rather than testing available DNA at the end of the case for possible identifiers, it will test the DNA of the hiring company upfront. Specifically, it will test for five specific markers:

1. The change marker
2. The trust marker
3. The control-freak marker
4. The micro-manager marker
5. The way-we’ve-always-done-it marker.

In all future cases, if 1 and 2 are present — but any two of the remaining three also are present — the I-Team will recommend that the brand-management and marketing-communication firm not take the gig, lest it become inadvertently complicit in any unwittingly criminal instances of neglect, abuse, or contributing to the dereliction of a brand.

If you have a case of brand mismanagement you’d like the I-Team to investigate, just call 1-800-WTF-HELP. We can’t promise every case will be broadcast on WWTF. But if we can’t get it on the air, we’ll forward it to Ripley’s Believe It or Not.

In the meantime, remember: If you see it on WWTF, it must be true. Or, as Mark Twain put it, “Of course truth is stranger than fiction. Fiction, after all, has to make sense.”

The post Forensic Files appeared first on Journal of Insurance Operations.

Authors’s Note: Each of the US states — plus the District of Columbia; Quebec, British Columbia, and Alberta; the US Virgin Islands; and Puerto Rico — have unclaimed property programs. Each determines its own dormancy periods, due diligence requirements, aggregate thresholds, filing dates, and reporting formats. Those change, on average, 1,650 times each filing season. And there are more than 160 property codes, with different dormancy thresholds for each jurisdiction.

Non-compliance penalties may include up to $25,000 in fines, plus 25% of the property value and 12% annual interest. Audits can go back 20 years or more. If jurisdictions conduct joint audits, a single audit can result in penalties from all participating jurisdictions. Even the definitions of and requirements for compliance can change by the type and value of the property. If the value of the property exceeds the jurisdiction’s aggregate threshold, more detail is required for each item.

With increasingly squeezed budgets, all of these jurisdictions are looking for every source of revenue they can find. So, companies are being pressured to report and comply. And companies that hold unclaimed property, the last known owners of which may be in different reporting jurisdictions, have to report in every applicable jurisdiction. It’s a nightmare that’s only getting worse.

Trouble Brewing

A long, long time ago, in a land far, far away, a crisp premium-rebate check was issued by Joe Bob’s Turtle Insurance Company and mailed to a bereaved owner whose favorite shelled reptile had passed on to that Big Swamp In The Sky. For reasons that are lost forever in unclaimed property lore, the check was never cashed. And since Joe Bob was keenly aware of his duty to his policyholders — and keenly unaware of unclaimed property reporting — to say nothing of its myriad, jurisdictional rules and regulations, he never thought to find out why.

In any case, the check came back to Joe Bob, who considered it found money and a closed case. Unfortunately, the State in which Joe Bob’s Turtle Insurance Company was domiciled didn’t share that view. Joe Bob received a phone call from Gladys Forscht, an auditor from the State’s Unclaimed Property Office:

Gladys: Good morning. I’m calling to let you know we estimate that you’ve incurred penalties and interest of $3,576.11 for failure to comply with the State’s unclaimed property laws.
Joe Bob: The who?
Gladys:Why, yes. It’s a lovely day here, too.
Joe Bob: You’re calling about the what?
Gladys: The State’s unclaimed property laws.
Joe Bob: What are those?
Gladys: Wow! I can’t imagine how you guessed. We do, indeed, accept checks. Thank you for asking.
Joe Bob: Checks from whom? For what?!
Gladys: Perfect. Golly, you’re such a gentleman. Have a nice day, okay? [click]

And so began Joe Bob’s long, painful, and needlessly expensive education in unclaimed property reporting.

What Joe Bob Might Have Done

If Joe Bob had known to do so – and if he’d even suspected the State had unclaimed property regulations – he’d have entered the unclaimed check into a SaaS application developed exclusively for the reporting of unclaimed property as soon as it came back. He wouldn’t have had to think about his State’s dormancy requirements because the application would have kept that information up to date. So, let’s re-imagine his story to see how he could have kept himself out of the proverbial soup.

Let’s say that when the check comes back in, it’s 90 days old. And let’s imagine Joe Bob determines he can’t find the person to whom he’d sent the check. Let’s also imagine Joe Bob knows he should monitor the record of that unclaimed check and take it out of his accounts payable system. Even though the check isn’t due to be turned over to the State yet, let’s say Joe Bob enters it into the SaaS application referred to above for safekeeping.

Once in there, the application monitors and manages that check — letting Joe Bob know when due diligence letters should be sent out, as required by the State, generating those letters for him, and running reports indicating to Joe Bob the point at which it has to be remitted to the State. Those things help Joe Bob’s cash flow in the bargain, forecasting when that check and any other monies attributable to unclaimed property need to be remitted to the State, and letting Joe Bob know how he has access to that money for cash flow, interest-earning, and/or other purposes. At this point, Joe Bob’s feeling pretty good about things, we imagine.

Joe Bob and the State

Now let’s say that in the State in which Joe Bob does business, un-cashed checks need to be filed and reported after two years. After those two years, during which Joe Bob’s been relaxing because he knows his unclaimed property reporting application has him covered, the application automatically puts the check on the State report. Joe Bob smiles. And the application documents the fact that the report has been submitted, so Joe Bob can continue to smile, knowing his compliance with the State is now documented and certifiably auditable.

Beyond that, Joe Bob now understands that what used to be a logistical difficulty is now managed automatically. What used to be a problematic cost center is now easy to track, monitor, leverage for cash flow, and use for interest income or other earnings until it has to be remitted to the State. And what used to be a headache is now a very affordable relief.

Joe Bob’s New Friends

If you’ll forgive the mixed-species metaphor, Joe Bob’s Turtle Insurance Company is now purring like a contented cat. Since his unclaimed property reporting application saves Joe Bob so much time, he now has more of it to spend with his insurance industry colleagues, who love to hear him tell stories about how his unclaimed property reporting application manages everything from asset input to State-mandated due diligence, from report submission to transparent documentation, from completion to compliance. They love to hear him tell the joke about how he reduced his employee turnover because he no longer has to assign people to keep track of his unclaimed property in Excel. They especially love to hear him say that spending just a little money on an unclaimed property reporting application put so much more money back to work for him, at least until it has to be remitted to the State. That one brings the house down every time.

When told that way, it’s a really good story.

Layton Olson was one of the founders of The Freedom Group, which was acquired by Fiserv. He helped found ETM in 2001. At ETM, Layton sets strategic direction for the company, its products, and its services. He develops partnerships with other application providers to facilitate integration with Wings Plus. Before The Freedom Group, Layton co-founded and served as President of Espiria, Inc., a developer of information security programs.

The post Joe Bob’s Story: Unclaimed Property Reporting Simplified appeared first on Journal of Insurance Operations.

If people had the objectivity to optimally position and effectively manage their own brands, there wouldn’t be people like me. [Insert the wave or whatever other celebratory maneuver or gesture you choose here at the very thought of there being no people like me.] But even though I do it for others for a living, I’m not objective enough to optimally position and effectively manage my own brand. I can tell you the precise genus and species of every mite, beetle, and bore that crawls every inch of bark on every one of my trees. But I don’t have the vaguest idea what the forest looks like. I’m too close to see it.

Regardless of what they think, say, or do, every other brand owner has precisely the same myopic inability. But when it comes to brand management and marketing, many of them are incorrigibly loath to have their visions, and their vision statements, assisted with corrective lenses; outside, objective help; or anything else. From the moment we conduct our initial creative presentation — based on day-long, face-to-face, fact-finding, objective-setting, and audience-diagnosing sessions — the push is on to replace the new with the old. Comfort zones are defined by the familiar and the failed. Is change really that fearsome?

How in the world to explain this phenomenon?

Don’t Try This at Home

Herb Lubalin was a lauded, legendary designer of typography. He passed away in 1981. I never had the opportunity to pose the question above to him. But he’d achieved stature sufficient that, for years before his passing, he could say something like this and not have to find an alternative to tar, feathers, and a rail as his mode of transportation out of town. It may just come as close as is possible to explaining why, in our business, hirers persist in attempting to do the work of the hired:

We have three divisions: a sensational division, a mediocre division, and a rotten division. The sensational division is on the top floor … There aren’t too many clients who want to operate in that rarefied atmosphere. In the mediocre division, we have clients who compromise: Put in some sensational ingredients, some rotten ones, and you have the opportunity to do mediocre work. The rotten division is where the bulk of the work is — and the reason it’s rotten is that clients determine the product.

That’s the kind of statement that gives folks like me a bad name. Theres’s no denying it. But there are times at which it can’t matter. Because it’s not just our names and our brands that are at stake. It’s our work, our reputations, and our integrity. It’s also the work, the reputations, and the integrity of our clients, who presumably pay us to provide services to them because they’re not objective enough, creative enough, or otherwise equipped to execute those services on their own.

In theory, those clients also pay us to ensure their brands are neither diluted nor diminished. But as Albert Einstein correctly pointed out, “In theory, theory and practice are the same. In practice, they’re different.” And that leaves us with a very challenging truth: If you have standards, and you defend those standards — even objectively and factually —you run the risk of being labeled defensive, stubborn, or emotional. But there are times at which those terms can be wrong, pejorative, and unfair.

The Gordian Knot

There are, of course, two cautionary sides to this story — and threads as fine as philosophy to weave: The first is that the guy who’s paying the bills is always right. That notion might be correct most of the time in consumer marketing. In business-to-business marketing, not so much. That gives you an idea of how courageous, forward-looking, and ego-free are the people who need help, know it, ask for it, pay for it, and then actually take it.

The second is that the guy like me whom the bill-payer’s paying might be creating for his own ego or, worse, his own portfolio. If that’s the case the guy like me should be fired summarily and unceremoniously — now. If fulfillment of the client’s objective is the only meaningful definition of success (it is), there’s simply no room for any manner of self-serving thinking or behavior from guys like me.

That brings us to the crux of the matter: In our nine-year history, we’ve never had one software developer for which we’ve developed (or thought we could develop) a single application. We’ve never had one retirement-living client for which we’ve architected (or thought we could architect) houses, apartments, cottages, condos, or campuses. We’ve never had one manufacturing client for which we’ve designed or machined (or thought we could design or machine) parts or equipment. We’ve never had one consulting client for which we’ve created (or thought we could create) better service offerings. But we’ve had clients in every one of these industries attempt to re-create our work. Why? Have we simply lacked imagination in not presuming we can or should do what they do? Or is there some other kind of double standard at work here?

Drawing the Line

My best guess is that there’s an underlying assumption of arbitrariness attributed to the work of folks like me. That’s why it’s so easy for others, in viewing our work, to say things like, “Make that blue instead of green.” “Let’s choose another image.” “I don’t know what that word means. Use another one.” “Let’s move the navigation bar.” And the list goes on.

Maybe I should tout more overtly the amount of research we do; the usability and readability studies we devour; the implications of design, color, and symbolism we learn; the market and audience behaviors we have to know before we can write a word or design a single thing. Maybe I should shut up entirely. I truly don’t know.

But I do know this: At select points, when it comes to defending your work, it’s clobberin’ time. It has to be. As the saying goes, if you don’t stand for something, you’ll fall for anything.

The post It’s Clobberin’ Time! appeared first on Journal of Insurance Operations.

Regardless of the type of insurance a carrier writes, analytics is often at the core of its business. Companies can make data-based decisions quicker and with more insight and accuracy using sophisticated analytics tools. When applied across the enterprise, such decisions in production, sales, and service create a virtuous cycle of continuous improvements — producing a corporate culture of analytically driven, sustainable excellence.

Virtually all carriers set the following four goals as top priorities: profitable growth, lower loss ratios, reduced expenses, and improved ease of doing business. To achieve those goals, carriers’ methods can be as varied as the carriers themselves. However, one element remains constant across the industry: Every aspect of the insurance business can benefit from an improved ability to predict the future.

What agents, brokers, and customers (the “ABCs” of insurance revenues) require — and how an insurer can best meet those needs — is often the origination point of all business processes, with all other functions essentially falling in the support category.

Creating more value for customers does not mean just pushing products. An insurance company — like most other businesses — needs to innovate in marketing, claims, contact, and service areas while being as precise as possible in pricing and avoiding costly risk assessment mistakes.

In the insurance market, sophisticated market segmentation and risk-based pricing methodologies are proving the value of integrating large data sets with advanced analytics methodology. Loss cost prediction can be achieved by several means, but some are more expensive or erratic than others. The systematic implementation of analytics in conjunction with smart decision making helps minimize risks and exposures for insurers while providing policyholders with strong coverage and good premium pricing.

For about 250 of the 327 carriers in the personal auto marketplace in the United States (those with approximately $200 million or less in premium as of 2010 data), a highly accurate loss cost prediction model can be outsourced for less than the cost of one full-time employee a year. In equivalent terms, that one employee would need to be able to build data warehouses, create and validate predictive models, determine loss cost estimates, develop appropriate rates and incorporate them into filings, and get such filings approved in multiple states.

Similarly, a midsize carrier with $500 million in premium using a third-party analytics provider would get good outsourcing value from reapportioning the cost of just two staff equivalents. With a smart outsourcing strategy, the largest carriers could potentially reallocate half-a-dozen headcount or more to other high-priority custom projects with little or no impact on competitiveness.

Meanwhile, what about competing on factors other than price? How does a carrier allocate investment dollars across the enterprise in marketing, underwriting, claims, distribution, IT, and customer- or agent-facing perspectives? What makes the company likeable? How do advertising and branding attract prospects to one carrier or another?

The short answer: If a lack of attention to operating costs results in higher premiums, insurance customers will quickly notice and react. If resources don’t support claims service portals, social media marketing, or initiatives that promote ease of doing business, customers will find another insurer. All of those factors and more are fertile ground for analytics to help boost performance, pricing, service, brand loyalty, and growth.

While most analytic projects won’t be visible to current customers, project results may translate into:

• underwriting appetite
• tiering
• rerating
• dislocation management
• product design
• retention discounts

New business prospects share in those benefits, plus the analytically derived rates may be competitively better for them.

Ultimately, keeping a business grounded in sound financial reasoning — and using the science of predictive analytics to do so — is how companies will sustain their relevance to those they serve and build an enduring culture by continually improving their ABC decisions.

This article was originally published in Verisk Review.

Marty Ellingsworth is president of ISO Innovative Analytics (IIA), a unit of ISO focused on advanced predictive modeling tools for the property/casualty insurance industry. Mr. Ellingsworth joined IIA from Full Capture Solutions, Inc., where he was cofounder and executive vice president. He has more than ten years of experience in the property/casualty insurance industry, with a focus on applied analytics and claims. For five years, he served the Fireman’s Fund Insurance Company. Mr. Ellingsworth’s 24-year career also includes positions at RiskData/HNC Software, Workers Compensation Research Institute, Beech Street Managed Care, and the U.S. Air Force. He received his bachelor of science degree in operations research from the United States Air Force Academy and his master of science degree in operations research from the Air Force Institute of Technology.

The post Better together: Analytics, data, corporate culture appeared first on Journal of Insurance Operations.

… And There Was Light

Two things happened on the same day last week: I read “Lead Behaviors not Lead Scores” (one in a series of “Marketing Rockstar Guides: Guides and consulting for the inbound marketer” — I’m not joking), by one Josh Hill; and I finished the book, Great Sky River, by Gregory Benford. The latter opened my eyes to the former.

In Great Sky River, the last remnants of humanity fight nomadically for survival on the planet, Snowglade, having long since abandoned Earth. The humans are relentlessly pursued by murderous mechs, myriad robotic creatures that embody artificial intelligence-unto-immortality, constantly recycling, retaining, and evolving remnants of themselves — including cumulative memory — to prevent their passing from temporal existence. In the process, they’re continually building the ever-more expansive infrastructure required to extend their mechanical existences, stripping Snowglade of all organic life and resources, including water. In their feelingless, soulless, yet determined desire to self-sustain, I saw the future Josh Hill and his pals are trying to convince us is coming (as long as we keep ponying up for their services, natch).

In one sense, that future already is here. We already conduct financial transactions in which no palpable currency changes hands. Digital data is merely exchanged, computer to computer, the requisite debits and credits are processed; and the records are duly logged. (Can’t be too careful about those audits, don’t you know, especially if they might be conducted by data-crawling bots, rather than some fallible geek pushing a pencil and calculator buttons.)

It’s no giant leap, then, to imagine the day in which your computer will track the behavior of my computer. (Your computer will not score my computer’s responses, of course. Josh Hill wouldn’t like that.) My computer will know what it wants, when it wants it, and what it wants to pay for whatever it is it wants. Your computer will, eventually and presumably, sell whatever it is to my computer via some manner of electronic automation. And even though you and I won’t be involved at all, both of us will be tickled pink about the whole, disembodied business.

And that’s precisely what the inbound-marketing hustlers want us to believe.

The Dark Side

But Great Sky River also put the lie to all of that because, in another sense, the book denotes why the mechanized dehumanization of marketing and sales will not, in fact, succeed long term. We’re human beings. As such, it’s a matter of nature and definition that we will never escape, defy, or surrender our tendencies to interact as human beings. Neither will we forego our social sensibilities or our need to engage each other emotionally and to be so engaged. Yes. Emotionally. Even in commercial contexts. No emotion, no brand. No brand, no sale (except at Walmart).

I imagine a salesman one day in the not-too-distant future (like the Renegade mechs in Great Sky River that refused to turn themselves in for recycling) scorning the web applications and technological gimcrackery of inbound marketing and its logic-defying, pie-in-the-sky, Field-of-Dreams ilk, sneering in the face of Marketing Rockstars while quoting Monty Python — “I fart in your general direction” — walking into the office of another human being, a flesh-and-blood prospect, and saying, against all prevailing wisdom, popular voodoo, do-it-yourself fantasies, and self-service nonsense: “Hi. What do you need?”

After making the sale, I see the same salesman, thinking to his boss through the telepathy-enabling chips in their heads, and having the following exchange:

Boss: Good God, Man! What have you done?
Salesman: I’ve made a sale.
Boss: But how … the database … connectivity … technology …?
Salesman: I asked him what he needed.
Boss: But you’ve annulled the machines!

And I imagine the salesman paraphrasing these thoughts from Killeen, the protagonist of Great Sky River to his uncomprehending and terrified boss:

The machines lived forever in some sense, their myriad selves gathered up and reprocessed in some collective mind. The impulse to do that must have come long ago from the same despair that afflicted humans — the sure knowledge of a personal, final end. So the mechs had made immortality their greatest aim … They had sought and found a way out of the crush of matter and time … [but death’s] sure and steady measure … brought an intense poignant richness to every moment. To mortal men each day came once and forever and struck sure into the heart. The machines would never know that. They lived in a kind of still gray death, where no one moment meant anything, because all moments were alike. Only the dreaming vertebrates knew that life held more than that.

Turn a Prophet

There it is: Like the mechs in Great Sky River, inbound marketing is an attempt to escape the crush of matter and time. It shares the trait common to every utopian scheme: It precludes humanity. It must. If Utopia were conducive to the vagaries of human nature, we’d have achieved it by now. Even the late Charles M. Schulz, creator of Peanuts, understood the human impossibility of Utopia. He let that understanding be expressed poetically succinctly by that philosopher for the ages, Linus: “I love mankind. It’s people I can’t stand.”

And like social media, inbound marketing is just another siren song, seducing us with the promise of more sales with less work in less time with fewer people involved in the process. We chase that siren with the feverish derangement of Ulysses’ mutinous men, overthrowing objectives and outcomes in the pursuit of output: leads, numbers, statistics, trends, patterns, scoring, behavior — more, more, more!

Tails wag dogs. Horses precede carts. And in the search for binary connections — “Analyze the data!” — we ignore the humanity that binds us all. In the process, we elevate Henry David Thoreau to the status of prophet: “But lo! men have become the tools of their tools.”

Thoreau and Benford would have gotten along famously.

The post Great Sky River appeared first on Journal of Insurance Operations.

1. Write.
2. Don’t quit.*

At a recent engagement, a young man in 5th grade asked the question. When I said, “Write,” he started to smile. When I said, “And don’t quit,” his smile widened, his eyes lit up, and he positively beamed. He replied, “I’ll never quit!” I looked at his face. Then I glanced at the face of this teacher. Then I looked back to the boy. I said to his teacher, “Look at that young man’s face. The only thing he’s going to do is succeed. And he knows it.” His teacher then smiled and replied, “Yes, he does.”

Along our respective ways, where in the world do we lose that kind of simple certainty? I don’t think it’s stolen from us. I think we surrender it.

What’s Our Price?

What could be worth a concession that profound? What forces could be so powerful as to compel us as we age to abdicate our creative confidence? Is it fear? Are we afraid to be judged? Are we reluctant to create because we think our efforts will fall short, even — perhaps especially — in our own estimations? If we actually do acquire a fear of failure, it’s more dangerous than it is sad.

It’s dangerous because if we’re not creating, we’re necessarily conforming, are we not? These are our choices: The beaten path or the road not taken. Granted, not everyone is temperamentally inclined to blaze trails, to create randomly, to start businesses, to defy the status quo or any of the myriad activities that might constitute doing it one’s own way. But what is it that convinces us to forego our self-faith and self-direction in deference to the notion that we have to go along to get along?

Maybe one of the most sobering things about spending time with groups of children is that it forces you to realize how easily so many adults accept defeat.

Many of life’s failures are people who did not realize how close they were to success when they gave up. (Thomas Edison)

The First Step is the First Step

Many of the children to whom I speak also ask me, “What should I do first?” Not surprisingly, many adults ask the same question. My stock answer is this: It doesn’t matter. Utterly undue attention is placed on the first step for all the wrong reasons. That attention becomes the source of paralyzing anxiety because people assume the first step has to be perfect. That’s as unrealistic as it is dead wrong. The first step is, indeed, the most important. But it’s important because without the first step, there will never be a second or a third.

Do you need to plan the trip? Yes. Do you need to be utterly sure of the destination? No. If you’re that locked in you’ll miss much. You’ll overlook opportunity. And you’ll fail. The key is to plan the trip; take the first step; then stop, breathe, look around, and think. If things look exactly as you imagined they would when you planned, take the second step. If they don’t look exactly as you imagined they would when you planned, allow for the change, amend the plan, then take the second step. For subsequent steps: lather, rinse, repeat.

The Upshot

I didn’t have the slightest inkling that writing and publishing a book for children would avail me of the opportunity to speak with groups of children. It wasn’t part of my initial plan. But I’d taken enough steps to see that opportunity ahead of me. So, I amended my plan and followed the opportunity. That’s really all it takes.

If you don’t believe that, let me know. I’ll invite you to join me at the next school I visit. You’ll see the truth in every young face in the room.

* If anyone’s curious, I dispense similar advice to people who ask me, “How do I ride a century?” (That’s cycling parlance for 100 miles.) My stock answer is that you have to do two things:

1. Pedal.
2. Don’t stop at 99 miles.

The post You Got That Write appeared first on Journal of Insurance Operations.

Companies complain about the devastating effect ad-blocking technology is having on their revenue streams. They have a point … to a point. Blocking ads does break the traditional covenant in which users gained access to content in exchange for exposure to advertising. But the complainants fail to acknowledge that the terms of that covenant have changed. In traditional media, ads are purchased for their potential to send specific messages to specific audiences. Our job, as consumers of content, is simply to be exposed to the advertising. But ads on websites are not about content. They’re about data-mining. Data-mining is not advertising. It’s not about informing. It’s the mad science of collecting audiences to present to pitches. It adopts the word, ad, and abuses the covenant. This is not communication, it’s mental and statistical manipulation. (Jonathan Spiliotopoulos)

I don’t know when Jonathan, my friend and partner, wrote that. But I do know it wasn’t yesterday. At first it made me wonder: Does it reflect prescience or common sense? As I got older, I realized it’s the latter because I realized what Jonathan had already known: Time, energy, and attention are finite commodities. And what he saw coming was the point at which the deleterious effects of saturation would be compounded by exploitation.

Mercator Caveat

While it may have taken them awhile to come around to Jonathan’s way of thinking, some pretty high-profile folks are getting there. Sir John Hegarty of BBH Global in London is one of those who’s finally feeling fairly flustered about the invasiveness of contemporary marketing practices and the gluttonous aggregation of big data. As you’ll see from this article (warning: bad words), Sir Hagerty may be many things. Bashful is not one of them. Here’s a sample of his forthright take on consumer stalking [my term]:

I’m not sure I want people to know who I am. I find that slightly Orwellian and I object to it. I don’t want people to know what I drink in the morning and what I drink at night. I think there’s a great problem here — throughout history we have fought for our freedom to be an individual, and you’re taking it away from us.

While I agree that Big Data is, in some of its usages, the antithesis of individualism, I have to admit that I don’t find it troubling in the slightest that, thanks to my shopper’s card, there’s probably someone at Stop & Shop World Headquarters who knows I’m more likely to buy almond milk than moo juice. And if someone at S&S HQ happens to say, “That crazy Mick in Westbrook prefer nuts to cows,” I’m okay with that, too, especially if they have almond milk in stock the next time I’m in Stop & Shop’s local store.

But — by the same token and to Hegarty’s point — I don’t ever visit the Stop & Shop website to be blitzed by data-dredging banner ads that want to give me nothing other than the opportunity to contribute another point to the deluge of data by which they make buying, marketing, and selling decisions. I don’t begrudge them the intelligence they need to run their business effectively or even profitably. (Egad! Not that!) But as I alluded in this post, I would like to retain even the chimerical notion that I’m making my own decisions.

So Close

If you give Brandon Evans, author of this article, the benefit of two doubts, there’s a chance that his baby won’t be thrown out with — let alone drown in — the bilge that constitutes his bathwater. The doubts are these: (1) While attempting make a case against garden-variety, data-grubbing mass marketing, Benevolent Brandon is the CEO of a company called Crowdtap (presumably with his consent), “an Influencer Marketing platform”. Forgive me, but I can’t help but observe that crowd and platform connote definitions that come perilously evocative of mass. (2) Blatant Brandon also tries to float this self-promoting brick in his misbegotten bathwater: “Crowdtap developed the Brand Influence Metric.” Oh, boy.

Nevertheless, there is a little cherub floating around in that murky swill. And it is this:

Impressions [provide] a simple metric for a mass-marketed world. Success today, however, is not based solely on quantity; quality of the engagement with a message must be factored in as well … Collaborative marketing will mean that the current barriers between companies and their consumers will be removed.

Blurry Brandon isn’t quite specific about what the current barriers are or how they will be removed — unless, of course, one purchases his vaunted Brand Influence Metric. And I don’t share this conviction with Brandon the Bold: “Successful brands will create and improve their products and messaging continually with their consumers. Likewise, consumers will influence and take co-ownership of their favorite brands.”

Astute marketers monitor the tastes and predilections of their prospects. That’s what they do. And that’s why we have, on one hand, and by way of example, Chopin vodka, for which you will pay in the neighborhood of $35 for a 750ml bottle — or criminal sums at your local, upscale watering hole for a single martini — with the promise of experiencing smoothness and cleanliness that borders on miraculous. It’s also why we have, on the other hand, Walmart, which constitutes the utter eradication of brand in service to the lowest prices.

There’s a term for this practice. It has nothing to do with the Brand Influence Metric. It’s called paying attention. It’s a kissing cousin of that other tried-and-true marketing practice: staying awake.

Hello?

So, in this high-tech world of website advertising, broken covenants, data mining, crowdtapping, brand-influence metrics, and self-serving palaver so voluminous we may actually succeed in pushing Internet content to its exhaustible capacity, here’s my radical suggestion for determining what your prospects want and for thereby being adequately informed enough to give them meaningful content: Talk to them.

Since we’re all so technically sophisticated — and given the diverse, disparate, and distensible data divined to reach this conclusion — the odds of our having some manner of phone at our disposal are very much in our favor.

Big Data? Big deal.

The post Taking the Con Out of Content appeared first on Journal of Insurance Operations.

“Thinking is hard work, which is why so few people do it.” (Henry Ford)

I saw a profile on LinkedIn the other day, in which the person who posted it described himself as a thought and people leader. I’m certain beyond a shadow of a doubt that the gentleman who posted that profile is many things, most of which are likely good, constructive, perhaps even singularly brilliant. I’m equally certain he’s anything but a leader of anything or anyone, particularly as it pertains to thinking. Beyond that, every time I hear the expression, thought leadership — like Captain Binghamton on McHales’s Navy — I could just scream.

Think about this: If we acknowledge anyone as a thought leader, we’re immediately and necessarily followers. Part of that determination to follow might be constructive. Perhaps we’ll learn something. Maybe we and/or our business will benefit from what we learn. There’s a chance we may even accomplish more than we might have had we not learned whatever it is we learned. And it might even make the person from whom we learned it a teacher, an expert, an authority. But a leader? Why? How?

Cast Irony

Consider this: One of business’s most vapid variations of vernacular is the word, innovative. Doesn’t it, then, seem just the slightest bit contradictory — if we are, indeed, so highly preoccupied with at least the rhetorical predilection to position ourselves as innovative — that so many people and companies constantly search for and/or position themselves as ostensible thought leaders?

Sheldon Kopp is a psychotherapist, not a business person. But he had absolutely the right idea when he wrote, If You Meet the Buddha on the Road, Kill Him. I’m as spiritual as the next guy, kids. But there’s no one waiting along the path, Buddha or any other thought leaders, to give us the Golden Key. And we may help some folks along the way, sharing a few thoughts that might provide help, hope, or inspiration. But we won’t be dispensing many of those perennially propitious principles, either.

Case in point: In the mid-’90s, I was given a tour of the First Congregational Church in Old Lyme, Connecticut. As the Irish Catholic boy that I was, I looked around at the sparseness of the interior’s trappings. I said to David Good, the gentleman who was the pastor at the time: “This is absolutely beautiful. But where’s all the stuff — you know, the statues and figurines and stained glass and crosses and all things that are supposed to represent the sacred, holy, spiritual stuff?” The pastor replied, “If you don’t bring it, it’s not here.” No more sound advice could be dispensed here, either.

Get Your Facts Learned

Here’s the deal: No one is going to show up to lead us. And the only way we’ll ever lead is by example. So, if you want to be a thought leader, you surely have to think. As Henry Ford noted, that’s hard enough all by itself. But then you have to get to work. You have to learn — about what you have to offer; about why you want to offer it; about why you believe you can offer it better, more persuasively, and more cost-effectively than the other guy; about your value; and about who will want whatever it is you want to offer and why. You have to plan, execute, observe, adjust, execute some more, observe some more, adjust some more, and never quit.

If you do all those things — bearing in mind that, at least at the outset, no one cares about what you’re doing — someone might actually notice. If enough people notice, a high enough percentage of those who notice might buy your offering. If you’re really lucky, enough people might notice and buy your offering that your brand will achieve some prominence. If it does, it’s likely you will, too. And if you do, it’ll only be a matter of time before someone calls you a thought leader. Don’t buy it.

At that point, you will not have gotten to the point to which you’ve gotten by posing as a thought leader. You will have gotten there by working your tail off, borrowing a few ideas, and coming up with the rest on your own. Like the proverbial overnight success, thought leadership is the stuff of legend and fallacy. It’s also a colossally sad and shameful waste of time because all the good stuff happens in reality.

Bruce Springsteen may not have expressed the need to bring it as succinctly as David Good. But if  you’re still angling toward thought leadership, cue up his tune, “Badlands” (from Darkness on the Edge of Town), and turn it up really loud:

Workin’ in the fields
till you get your back burned,
Workin’ ‘neath the wheel
till you get your facts learned.
Baby, I got my facts
learned real good right now.
You better get it straight, darling:
Poor man wanna be rich,
rich man wanna be king.
And a king ain’t satisfied
till he rules everything.
I wanna go out tonight,
I wanna find out what I got.

It may be your best hope.

The post Thought Followership appeared first on Journal of Insurance Operations.

Spock: Captain, why are you wearing that radiation-proof suit and preparing to exit the starship?

Kirk: Scotty, Bones, and I are going to measure the Dark Social.

Spock: [raises eyebrow] Come again?

Kirk: Dark Social. It comprises the communication transmissions we get from sources other than Starfleet Command.

Spock: What difference does it make?

Kirk: Well, if we can figure out which of the transmissions do come from Starfleet Command, then we’ll be able to tell which ones don’t.

Spock: Quite logical, Captain. But if you can discern communications by content — direct orders, course corrections, or mission amendments from Starfleet Command  vs. threats from Klingon warships, challenges from deranged tyrants from other planets, or random contacts from alien life forms — why measure the communication?

Kirk: Because they might have come from some indirect source like reflecting off a planet or a star or something.

Spock: I still don’t know why you’d want to measure those communications.

Kirk: Because you can’t manage what you don’t measure.

Spock: But why would you have to manage communications if they’re all inbound?

Kirk: What?

Spock: I recognize the need to manage outbound communication, Captain. It simply wouldn’t do to have confidential transmissions intended for Starfleet Command to be errantly sent to, by way of example, Arngorff, the reptilian leader of the Slimerians. What I don’t understand is the need to manage inbound communication when all that’s required is to receive it and respond to it appropriately if, indeed, any response is required at all.

Kirk: Well, because Dark Social is otherwise invisible.

Spock: Yes … and so …

Kirk: So if we can’t see it but we measure it, at least we’ll know it’s there.

Spock: And that will lead you to conclude that you can manage it.

Kirk: Atta by, Spocky old … Hey! I don’t think you’ve ever told me your first name.

Spock: Tzchmrvrtzytz.

Kirk: Gesnundheit.

Spock: [wiggles ears] No. That’s my name in Vulcan. Its closest English translation is Ernest.

Kirk: Are you serious?

Spock: No. I’m Ernest. But they’re pretty close.

Kirk: Yeah. Okay, Ernie. Are we cool on this Dark Social thing, or what?

Spock: In truth, Captain, I still don’t quite grasp the reason for going to all this technical time and trouble to measure something that doesn’t warrant measuring.

Kirk: Oh, all right, Spock! Good grief! I’m doing it because the Commander-In-Chief of the Federation Starfleet wants to know! HE TOLD ME TO MEASURE DARK SOCIAL!

Spock: You mean to tell me the Commander-In-Chief of the Federation Starfleet has nothing more important with which to concern himself than measuring Dark Social?

Kirk: Am I the only boss you’ve ever had, Spock?

Spock: Well … yeah.

Kirk: You’re lucky. Oh … one more thing: While we’re out, have one of Mr. Sulu’s technicians in the Thruster Room bring a left-handed monkey wrench and a bucket of steam to the bridge for when I return.

Spock: Is the Starfleet Federation, by any chance, a bureaucratic organization?

Kirk: Why do you ask?

Spock. [flares nostrils] Never mind.

The post Warped Speed appeared first on Journal of Insurance Operations.

Software is going to pave the pathway by which endless streams of sales will smoothly flow to our doors in constant abundance, and all we have to do is watch the numbers pile up. How do I know? This article said so, silly.

The truth is, this article is as relevant as the news: It’s immediate. It’s an indication of what’s going on right now. Is the thinking it reflects popular? Yes. Is it reflective? No. Are the folks who peddle this stuff making tons of cash right now? Presumably. Will it be around tomorrow? Ay, there’s the rub.

Who’s On First?

I begrudge our authorial friend, Jason Miller, nothing. He’s fulfilling his responsibility to his employer, Marketo, admirably. He’s also establishing his street cred by getting in a sweet little plug for his side gig, presumably not at his employer’s expense — or to the dilution or detriment of its brand. That’s good marketing, right? Hmm ….

What he’s not doing is defining his terms. Case in point:

Modern marketers have more data available at their fingertips than ever before in history. And marketing automation allows them to manage that data into actionable insights. No longer is there any question around what the return on their marketing spend is and how it contributes to driving revenue, there are now hard metrics to report.

The term left undefined is actionable intelligence. What, precisely, is actionable? The data? Data without meaningful analysis (more on this later) is … well … data. Whatever a given data set means to you, it’s not likely to mean the same thing to me. And what action should be taken? Common sense says it’s a good idea to know what content people are consuming so messages can be tailored most effectively. But there comes a point at which the enamored start using tails in futile attempts to wag dogs.

Woof!

Here’s what happens: This stuff is typically “discovered” by companies that don’t understand marketing, to say nothing of the meaningful establishment of brands. It’s typically discovered by the sales folks in those companies. And following the same logic that compels them to load their websites with labyrinthine numbers of un-navigable pages — and all the stream-of-consciousness nonsense with which they can constantly inundate the content management systems on which their sites are built — they all jump to one of two bruising contusions: (1) “This thing will make more sales for me!” or (2) “This thing will make sales easier for me!” If it stopped there, it would be bad enough. It doesn’t. It isn’t.

After they decide that the Lone Ranger wasn’t the only one with a silver bullet, they conclude that all of this automated magic — sales-ready leads, leads they own, lead scoring, et al. — are legitimate grounds for re-jiggering their business models. Rather than using the actionable data they’ve been collecting to help better understand prospect behavior and market predilections — then using it to establish relationships person-to-person — they confuse means and ends by subjugating content and accessibility to an effort to generate even more actionable data. It’s akin to assuming that every nibble is the exact equivalent of a landed fish.

Worse, rather than attempting to determine whether they’ve selected the right tool to serve the work that needs to be done, they start to amend the work to serve the tool. At the expense of presentation and accessibility, websites get turned upside down to enable “trackability” and lead scoring. At the expense of coherent direction, email gets packed with multiple hyperlinks — leaving recipients to wonder, “Should I go here? Should I go there?” — so clicks can be scored and ranked. And at the expense of any strategic considerations about brand conventions or consistency, to say nothing of any strategic business objectives, strategy, presentation, accessibility, clarity, and brand consistency are relegated to saddles on the horses behind the carts.

Doomsday

We’ve become so averse to work, and so enamored of technology as a surrogate for work, we don’t even know recognize things like illogic, lost opportunity, the absence of common sense, or the need to establish personal relationships anymore. Call the dude? What the hell for? I’m tracking him with software.

That’s exactly what our buddy, Jason, and his ilk are banking on. Ever the marketer, Jason saves the best for last:

As marketing automation begins moving into the mainstream and quickly becoming the hot topic at marketing conferences around the world, the analytics that this technology provides will prove and improve marketing spend and finally give the marketer a seat at the revenue table.

Question 1: Is the purpose of this software to improve business or to become the hot topic at marketing conferences around the world? Question 2: Aside from counting opens and click-throughs, what are “the analytics this technology provides”? Question 3: Is the purpose of this software to improve business or to “improve the marketing spend”? Question 4: If the marketer is the bridge between the brand and fulfillment (sales), why doesn’t he have a seat at the table already?

And here’s something that’s really difficult to figure out: If folks are so lathered up about the prospect of robots replacing people in manufacturing jobs (ignoring the fact that manufacturing jobs in the U.S. have been declining for years), where’s the outcry over the fact that software is at least creating the illusion of replacing people in marketing and sales activities?

As a consumer, if my attempts to satisfy my curiosity about a product or service happen to rate me a “lead score” that launches an outbound fusillade of sales activity in my direction, I’m headed down to my bunker.

Please send me a message to re-surface when pigs achieve flight.

The post Aerodynamic Pigs appeared first on Journal of Insurance Operations.

In a recent conversation, Carl Krapp, Ph. D., Managing Director of FJA-US, talked with Mark O’Brien, founder and Principal of O’Brien Communications Group, a member of the editorial board of the Journal of Insurance Operations, and author of The Front Line. They discussed the intricacies of, the differences between, and the reusable policy components of Property/Casualty and Life insurance, as well as the most efficient means of modeling, developing, deploying, and distributing products for both.

O’Brien: In previous conversations, you and I have talked about adopting a manufacturing model for the creation of health-insurance products. If we were to adopt a manufacturing model for building property/casualty (P&C) insurance products, what are the policy aspects that might best be stored in a central repository as reusable inventory?

Krapp: For P&C, two or three components are very important. First, the component that determines what the policy actually covers. In homeowners, it might be the construction. In BOP, it might be a building or its contents. In auto, it might be uninsured motorist or collision. Each of those would be identified as a kind of pre-component to be inventoried. Second, what’s also important for P&C — and often neglected — is a precise description of the items it covered, which becomes critically important should a claim require processing later.

O’Brien: That seems as if it would be self-evident.

Krapp: Perhaps, but only to a point. For example, auto insurance doesn’t necessarily mean that every single car can be insured. Sometimes there are restrictions such as the type of vehicle, whether it’s a sports car or sedan or minivan.

O’Brien: Now I see what you mean by precise description.

Krapp: Exactly. So, where product modeling, then, provides the biggest bang for the buck is in identifying all the various configurations and product choices required. You need to model things like deductible amounts, insurance limits, specifications for accidents and bodily injuries, and comprehensive coverage. Multiply that kind of complexity by the respective rules, regulations, and mandates of 50 states, and you start to get the bigger picture, especially when it comes to offering appropriate choices to consumers.

O’Brien: You have me thinking about precision again — and reusability.

Krapp: Right. So, now let’s add the third aspect, which is pricing. You need to provide premium calculations to the insured. And the rates you have to produce are also dependent on, not only whom you’re insuring and what you are covering, but also the jurisdiction and the corresponding legislation in which you’re writing the insurance. The rating or pricing components are critical.

O’Brien: Am I correct in thinking the variability of risks in commercial lines get multiplied exponentially by untold numbers of factors? If so, that would seem to the source of significant complications.

Krapp: You’re absolutely right. Trying to figure out the type of risk attributes you need to collect about each insured object is very difficult. Even though the industry is highly regulated, there’s no standardization out there. From customer to customer, assessing risk and tying rates to it is very challenging. And that’s why being able to reuse that information, once it’s identified, is so important.

O’Brien: That’s amazing because what I was about to ask you was, “Couldn’t then, an insurance company, based on its own history and its own rating experience, if you will, also inventory those risk attributes as components? Based on what you just said, I have to presume the answer is yes.

Krapp: That’s just where we want to go. Obviously, you need to assess the credibility of the data you’re collecting. Insurance is still a game of big numbers. If you just have a small sample set of commercial risk profiles, that won’t help. The bigger you are the better you become, for sure. If you look at the group life and health businesses, they take claims history into account. Commercial P&C will have to take the same route and make that process more formal — to make it repeatable and reusable — than it is today.

O’Brien: How do these same concepts apply to life insurance?

Krapp: Life is an interesting business.

O’Brien: Thank you. You’ve just given me my new personal motto.

Krapp: [laughs] In our experience with life insurance, the aspects or components of the coverage are quite different in the United States from what we see in Europe and elsewhere. I still need to figure out why that is. What we seen in the United States is similar to P&C; that is, we need to model product options depending on product types: Is it a term product? Is it a cash-value product? Is it a variable product that entails investment choices? If the product has investment choices, those have to be managed, as well.

O’Brien: The age of the prospective insured also is a factor, is it not?

Krapp: It is. The rules for different ages must be managed, too. To what age-range can you sell particular products? What are the age-related pricing factors? To how many insureds should you sell cash-value products given the taxation component that also must be modeled so the benefit can be adjusted dynamically towards the cash the policy might actually yield? And for term policies that might run 20, 30, or 40 years, you have to constantly assess whether the benefit needs to be adjusted. For example, should disability riders be eliminated because insureds get too old?

O’Brien: And, again, we multiply the levels of complexity by 50 states.

Krapp: Yes, we do. For pricing, in the United States, the Actuarial Department often gives us predetermined premium tables, in which factors and premiums are pre-calculated based on certain benefits or policy setups. For instance, if you have five-year term, ten-year term — or level or index products — all those calculations are pre-built in rate tables. That’s relatively straight forward and simple. We see that in Europe, too. But over there, we get much deeper into the calculation side of the house to the point that we can calculate the premium on the fly by drilling down to mortality or morbidity tables. We’re able to model cost assumptions in pricing products, along with distribution and administration costs.

O’Brien: So, the European market takes a more sophisticated, flexible, and comprehensive approach to building life insurance products.

Krapp: Very much so. When we issue a policy in Europe, we have all the information to tell us how much of the cost of the insurance do we apply, how much of the premium should be allocated towards the various cost elements that we store on the policy level. We sometimes call this first principle rating.

O’Brien: That kind of capability would seem reduce the insurer’s exposure, would it not?

Krapp: It would, and it does. Building products at that level of sophistication produces myriad data points, all of which can be used to analyze your book of business, to assess whether your assumptions were right or whether you have to adjust your cost of insurance by looking at your premium. Only when you understand how your premiums are distributed over cost can you really compete on price in a highly competitive market.

O’Brien: You seem to be venturing into predictive analytics here. Can the things you’re describing here for the Life business be done in P&C?

Krapp: I think it can be done. I just haven’t seen it yet. The principles are the same. If you get your claims costs under control and can tap into your online claims experience right away, you’ll start to compile the data you need for predictive analytics.

O’Brien: At the risk of going too far afield, I’d like to ask about something else. There are some rumblings afoot about the convergence of insurance lines, perhaps through aggregate or collaborative distribution channels. To those of us who’ve been around the insurance industry for a while, at least one of the possibilities seems to be a return to the old large multi-line insurance company, rather than specialists in life, health, P&C, etc. What do you see?

Krapp: The company that can figure out how to package up policy for life that covers all aspects of your personal risk from health insurance to life insurance, to things like auto, homeowners, fire, and others in a form that is adaptable to current buying trends and sell it through brokers and online would clean up. But nobody has done it. Nobody can do it because the way in which insurance companies today are structured. They have silos and niches: P&C, Life, or Health. I’ve worked for large insurers that actually had multiple lines, but even they couldn’t succeed at all of them.

O’Brien: This is above my pay grade. But if your structure were your problem, wouldn’t you change your structure?

Krapp: You might. But you still have insurance systems to contend with. Each system is specific to its particular line, and none of the systems talk to each other. Look, for instance, at the simple process of profiling the model insured in a multi-line insurer. It’s almost impossible. I’ve seen $50- to $70-million projects failing, in which the only task was to get a database with all the policies organized by insured, for each insured. Never happened.

O’Brien: That doesn’t sound like too daunting an undertaking.

Krapp: The undertaking’s not wrong. The approach is. It begins with the conviction that existing systems will be retained, integrated, and combined to provide a consolidated view of the world. But it ends up combining incompatible technologies with bad data. To achieve the objective — presuming the objective is valid, to say nothing of affordable — you really have to start from scratch on green field. Then you might have a shot.

O’Brien: What’s interesting to me about that explanation is that I worked at insurance companies at a time in which many senior people didn’t have the vaguest idea where their revenues or profits came from. But the companies were highly profitable, and they had neither the data nor the technology that you just described. And what’s ironic is I think we would say it’s the good old days notion. That was a simpler time. So, we’d assume technology would continue to simplify; but that’s not what’s happened. Is that because economic conditions have tightened and people do have to be more critical in the evaluation of their data? It’s a little bit of a conundrum: We have the technological means to assess our business in far more scrutinized detail than we did before, and yet it’s more difficult.

Krapp: That’s because when the systems we have were created, there was a particular aim in mind: Create a life insurance policy. Or create a health insurance policy. The fact is that each type of policy administration system dramatically improved efficiencies in the lines for which they were designed. But they don’t talk to or work with each other. So, they hinder us now. And no one ever thought to think beyond the line-specific policy administration system to build an insurance-specific administration that was inclusive of all lines. Think of the profiling data that beauty would have yielded.

O’Brien: Wow! That seems so self-evident now. But it never happened.

Krapp: It’s like putting commercial centers in largely residential communities. You create congestion because of shortsighted street design and traffic flow. There was no master plan that anticipated mixed use. When most of our existing insurance systems were created, nobody was thinking in greater dimensions. And, in fairness, no one knew where technology would go such that a master plan might have been able to be created.

O’Brien: I find Victor Frankenstein’s creature coming to mind. Sometimes it’s harder to kill the monster than it was to create it.

Krapp: That’s why we need to have this rethinking now. Every system implementation shouldn’t deal only with the nitty-gritty integration things we have today. They should be one aspect of master plan that recognizes all the little houses I built before may have to come down. And the calculations have to include — not just the short-term cost of razing and rebuilding — but the long-term cost of NOT doing that.

O’Brien: My inner C-Suite Dude is trembling at the very thought. And my Risk-Aversion Meter is pinned.

Krapp: True. If I were running a profitable business, why would I risk that? In fact, I probably wouldn’t. But the start-ups, the new kids on the block are already doing it. Look at Progressive. Look at e-Insurance. We’re going to more of those kinds of companies put pressure on the rest and show us what needs to be done and how.

O’Brien: At the risk of sounding cynical, do we think most folks at the C-level even recognize what might be possible if they could get their arms around this whole thing? Or is it simply, as you stated, that the fear of the risk and the risk of failure is so great that they don’t even want to take that on?

Krapp: I don’t think there’s a risk of failure because it’s not even on their radar. They’re not looking at it like, “Oh, my gosh, I can’t do this because if I do it I’m going to fail.” If you’re profitable, if you’re a stock company and your stockholders are happy, if you’re making money, why look at something else that’s going to take time, going to take money, going to take resources you could put to use elsewhere? You’re looking for incremental improvements. You’re not looking for the big bang in that situation.

O’Brien: Is there a middle ground. In other words — if I’m not the new kid, and I’m not comfortably profitable — is there something I can do to help me escape some niches or bring down some of the silos that might be keeping me from being more diverse and flexible?

Krapp: Yes. For modeling and distribution, you can adopt a platform that is agnostic of the systems it supports. Today’s traditional distribution and administration systems are not agnostic that way. There are a lot of rules hard coded into them. If you change your product, you need to change the systems. With an agnostic platform, all you have to do is configure the interface and what you want represented on it and determine who’ll use it. Is it a sophisticated broker, or is it the consumer who surfs the web? With an agnostic platform, you can address the spectrum.

O’Brien: I know we’re here to talk about Life and P&C. But given the distribution schemes for healthcare that may very well include private and public exchanges, as well as accessibility through big-box retailers, will the agnostic platform you’re describing work for health insurance?

Krapp: Absolutely. It’s akin to what I referred to a little while ago: the insurance-specific application instead of the line-specific one. And again, it’ll only be about putting the appropriate user interface on top of it — or even making your products accessible to a distribution platform on which you have no control over the interface.

O’Brien: Would it be fair to call such an agnostic platform something like an illustration system for life insurance — or a proposal system for P&C — in which the user selects products and coverage limits, and the platform mines the requisite data from the appropriate systems?

Krapp: Yes, that’s fair. Then, as the broker or the prospective insured, you can see where the premium dollars go, you see what benefits you get, and you can run different what-if scenarios. You can run alternative quotes with higher or lower deductibles, with different payment methods, and so on. The user then makes a decision, accepts a quote, and is guided through the process of applying for the coverage and determining if more information is required for underwriting.

O’Brien: How does that differ from what the P&C industry typically refers to as rating and quoting systems? Is it the fact that it is technology agnostic?

Krapp: Yes, that’s pretty much it. I also see the same platform being used for self-management of the policy after it’s been sold. That’s’ traditionally been back-end functionality for insurance companies. But I see that changing as we go forward. Think about it. As a policyholder, why shouldn’t I be able to update my policy data on my own — unless, of course, I’m changing it to an extent that makes it a greater risk for the insurer? In that case, the system can flag it as an exception and route it to underwriting or a support person.

O’Brien: So, to bring us fill circle: As we watch companies like Allstate which has acquired Esurance, and if we anticipate the convergence of insurance lines from single providers, does the agnostic platform you describe help enable that kind of one-stop shopping?

Krapp: Yes. It’s a technical reality. As it pertains to product design, the actuarial side of the house will have some work to do. If you have a package policy that contains Life, P&C, Health, retirement accounts, and annuities, actuarial departments will have to start pricing products much differently or assessing policies quite differently. But the technical by which all of that gets operationalized definitely exists. It’s a bold new world, to be sure.

O’Brien: Amen to that. And since I’ve adopted “Life is an interesting business” as my personal motto, thanks to you, what say we get to work on an age-agnostic platform for life.

Krapp: We may have the philosophy for that, but the technology will take a little more work.

O’Brien: [laughs] Indeed.

The post Life is an Interesting Business: An Interview appeared first on Journal of Insurance Operations.

In Working with Consultants, Part 1, I detailed a humbling encounter with a prospective client. The lessons learned were as instructive to me as they should be to any consultant to management or would-be consumer of their services. Let’s see if I get it right this time.

Revisiting my initial interaction with Mike (the prospective client), my follow up to his question, “How can a consultant like you help…?” should have been another question. A simple inquiry, such as “What part of starting up your business is most challenging right now?” may have provoked a thoughtful response from Mike and served me better than the litany of generic gobbledygook I happened to belch. My quip was reactive, a mere offer to help tackle the pile of work Mike was facing to organize the new business. Frankly, doing the work – or delegating it to his staff – was his job. A better approach would have been to confirm his desire to tackle that work more effectively and efficiently, not offer to actually do it. If Mike really wanted someone to “help organize, manage and get things done” or “attend to the details” (as I had offered), he wouldn’t need a consultant. He’d need an assistant, an extra set of hands working at his direction to perform administrative or clerical tasks. This notion extends to programmers, business analysts, project managers and others who refer to themselves as consultants. If they’re directed to perform tasks that similarly qualified individuals can perform, they’re not consulting. They’re doing a job. A good consultant is an interventionist whose ideas influence an organization in an effort to improve its condition.

And so I learned.

Rule One: Hire a consultant to improve your organization’s condition, not complete tasks that you or your staff should be doing.

*     *     *

So many consulting engagements end with the production of “deliverables.” Consulting has become inextricably associated with the creation of reports and spreadsheets and PowerPoint presentations bursting with page after bloviating page of findings and recommendations and strengths and weaknesses and opportunities and threats and next steps and impediments. And all this paper flying about is often the only evidence a client needs to prove work has been done, and tens or hundreds of thousands of dollars have not been spent in vain. But what has really changed? How is the organization better off? The proud consultant spends six months of his life commuting to Cedar Rapids racking up Delta miles and Marriott points, working fifteen hours a day, only to present a magnum opus that is later circulated through the executive ranks, lauded for its thoroughness and finally shelved indefinitely while management attends to more pressing matters.

An effective engagement involves interactions with shareholders, management, staff members, suppliers, customers and the surrounding community in an effort to – you guessed it – improve the organization’s condition. The type and number of possible initiatives the engagement may include is virtually limitless. Technology adoption, process improvement, procedural changes, new productivity measures, workspace configuration, skills transfer, customer interactions, staff reassignments or something entirely different and unexpected are all possible.

Most likely, multiple, interdependent initiatives are called for (e.g., a new strategy may require the adoption of new technology; staff reductions may be preceded by an automation project). Engaging a consultant to design, organize, initiate and facilitate them will always yield a far more beneficial outcome than even the most impressively leather-bound, four-color, relentlessly critical (yet hopelessly optimistic) report.

My own misstep had me offering to deliver “optimized process models.” In retrospect, this approach seems to be misguided. An effective consultant performs a detailed inquiry into the current state of an organization, frames problems objectively and offers solutions designed to – get this – improve its condition. Only once a problem has been objectively defined and the likely benefits of a solution contemplated should an intervention begin (e.g., creating and implementing new process designs). Absent a definitive set of actions designed to improve the organization’s condition (let alone confirmation from Mike that his processes needed optimizing), my “optimized models” would be effectively worthless.

And so I learned.

Rule Two: Gain agreement with the consultant on the actions (interventions) required to improve the organization’s condition, not a list of deliverables.

*     *     *

My last bit of advice involves a common practice among consultants: billing for their time. Consultants tout their hourly rates as if they bear some relationship to their effectiveness. Clients engage consultants by the hour out of habit or as a matter of policy. Yet there is virtually no objective way to ascertain whether an hour of a consultant’s time is worth one hundred, four hundred or three dollars. Pricing consulting services by a unit of time is almost always driven by the cost to employ the consultant or sustain their lifestyle. It has little to do with the value they provide. Worse – and consider this carefully – the less time it takes a consultant to solve a problem, the more valuable they become. Yet, by billing for time, the consultant who takes six months to define and solve your problem is paid far more than one who gets the same job done in a couple of weeks. The price of the engagement should be justified by the expected value of the outcome, not how much time the consultant spends working on your behalf.

A related issue arises when you willingly hire a professional who does not properly address your problems. You want to increase sales, so you seek a sales trainer who charges $5,000 a week to conduct fifteen Sales Mastery Workshops. You want lower operating costs, so you hire an outside accountant for $300 an hour to review your books and find ways to cut costs. Employee turnover is high, so you engage a corporate coach for $2,500 a day to improve morale. But each of these examples represents a classic mistake: You’ve defined a problem, prescribed a fix and agreed to a time-based rate – before any objective analysis is completed. Rather than seeking a qualified opinion, an effective treatment and consensus on the value of that treatment, you’ve performed your own diagnosis and essentially hired an assistant to do what it is you believe needs doing. And you may or may not see an improvement.

An effective consulting engagement would involve reducing the average time it takes to acquire a customer, not running a series of classroom sessions. Or devising a marketing strategy that enables you to double revenue without incurring additional debt, not slashing your advertising budget to save money. Or discovering why morale was flagging by listening to staff, and empowering them by devising compensation plans that reward risk taking, not holding pep rallies or hosting corporate retreats.

Now, suppose these effective engagements were completed in three months. Or two. How would you quantify the consultant’s value? What would you be willing to pay? And who would you rather hire? A service provider with an incentive to rack up as many hours, days or weeks as possible to support their lifestyle, or a consultant with an incentive to get the work done quickly and move on?

Of course, my error was offering services for an indefinite period for a fixed monthly fee without directly addressing Mike’s concerns. The price bore no relationship to the value I might have otherwise added to his organization.

And so I learned.

Rule Three: Consider the value of the consultant’s intervention, not the cost of an hour of their time.

*     *     *

For the sake of economy I stopped this article at three rules. There are undoubtedly dozens. Scores, even. But these three fly in the face of convention. They dismantle deeply entrenched habits. And they’re distressingly overdue.

Peers may object. The sky may fall. Locusts may even take flight. But my hope is that you’ll glean something of value from these carefully chosen words. My hope is that, for the good of the profession – which has inspired far too many punch lines – you’ll take these rules to heart and enjoy some genuine benefit. And my hope is that you’ll learn from my mistakes without ever having to endure them yourself. Because that, dear reader, is the single most valuable thing a good consultant has to offer.

Rob Berg is a Principal and Director of Perr&Knight’s Insurance Technology Group (ITG). In addition to managing Perr&Knight’s internal development initiatives, Rob and the ITG team work with insurers to provide solution design, requirements gathering, vendor selection, business case development, project planning, risk assessment, business process design, IT governance, data management and staff augmentation services for their technology initiatives. He is a member of ISACA and a Senior Member of the American Society for Quality, a frequent speaker at industry trade events, and has been quoted or published in multiple industry trades including Best’s Review, IASA Interpreter, InsuranceNewsNet and the Journal of Insurance Operations, of which he is Editor-in-Chief.

The post Working with Consultants, Part 2: Three Rules for Productive Engagements appeared first on Journal of Insurance Operations.

Now try this one: You walk into a communication firm’s office with a year-old product or service, for which you have no established brand. The firm hands you two ads, tells you to run each one four times during the year, and suggests you come back for a couple more if you haven’t sold anything by then. Is that more or less ridiculous than the situation in the first paragraph?

The first situation is highly unlikely because patients aren’t inclined to accept medical prescriptions without fully explaining their symptoms, discussing them with their doctors, answering their doctors’ questions, and receiving appropriate diagnoses. The second situation happens frequently because so many companies are inclined to seek communications prescriptions without explaining their symptoms (objectives, competition, resources, obstacles, clutter, confusion, etc.) and receiving appropriate diagnoses.

And companies often fail to recognize this: For the ongoing challenge of brand-recognition, there is no one, permanent cure — no magic pill or silver bullet. Keeping a brand prominently positioned takes tireless vigilance and relentless work. But there are ways to keep your brand healthy — to make sure the members of your target audiences know who you are, what you do, why you do it the way you do it (as opposed to the ways in which the other guys do it), and why doing what you do the way you do it is advantageous and valuable.

Where Does it Hurt?

To find out the reasons for which your brand is ailing, here are ten questions you can ask yourself, just to get started. The best way to go about this is to put on your white lab coat (stethoscope optional), walk into a room with a mirror, and ask the questions as if you were both doctor and patient. If you start to get confused, you can take the lab coat off when you’re playing the part of the patient. But if the air in the room is dry, you’ll get wicked static cling. Here we go:

1. Can you clearly articulate what your company is or what it does?
2. Can you concisely and accurately express your core message(s)?
3. Can you do it in one sentence?
4. Have you researched your competition, assessing their communications methods and spending levels, and gauging awareness of your brand in specific markets or segments?
5. If not, how will you establish direction for building your brand or derive reasonable expectations for what you can accomplish and when?
6. Can you state your objectives meaningfully and with specificity?
7. If not, how will you determine the challenges you face in achieving them and deriving appropriate measures for your progress?
8. Have you clearly identified your target audience(s)?
9. If you don’t know who they are, what they need, and how they think, how will you reach them most effectively?
10. In talking about your company and its offering, have you ever used the terms unique, innovative, outside-the-box, leading, end-to-end, granular, or robust — or referred to your offering as a solution?

If your answer to #10 was, “No,” look at yourself in the mirror and say” “Well, I have some preliminarily good news. Your condition is not fatal.”

Treatment Options

While effective brand management does require appropriate prescriptions based on accurate diagnosis, there’s nowhere near as much science involved as there is in medicine. Nor are there as many things to prescribe as there are in pharmaceuticals. So, what’s the ailing brand to do? Here are the three most important and effective things you can possibly do:

• Stop.
• Put down the tactics.
• Think.

Sound harsh? If so, you’d be surprised at how many companies treat their brands as anchors — afterthoughts to be dragged behind the development and promotion of products and services — rather than as the launching pad from which everything blasts off.

To avoid treating your brand as window dressing, and to prevent having to deal with the consequences of having done that, just remember this: Without a strategy, all tactics exist in a vacuum. So, clearly define your strategy. What are you aspiring to do? Why? If you can answer both of those questions, you’ll be able to devise a strategic approach to communicating your brand. That will help you determine the tactics by which it will be most effectively communicated.

You’ll also have to establish a budget. This is not a matter of knowing what to spend. Rather, it’s a matter of committing to spend and knowing how to spend what you have. If your strategy is informed by budgetary reality — and if you’ve appropriately struck the balance of objectives, time, and resources — you’ll allocate those resources effectively among your available tactics.

To be effective tactically, you have to appropriately prioritize the tactics you employ. Advertising, direct marketing, an engaging website, social media, newsworthy press announcements, speaking engagements, and such will all help lift your brand to its desired prominence, increase your reach, and create more frequent impressions. But you may not be able to afford them all. Choose the ones that will give you the most immediately apparent returns.

As you’re strategizing, budgeting, and ramping up tactical execution, choose the appropriate results to measure. You’ll get a fuller picture of your progress if you keep track of outcomes (changes in awareness, attitudes, behaviors; increases in sales activity; etc.) as well as output (brochures, sell sheets, emails, web pages, press announcements, social-media posts, etc.). If you favor output over outcomes, buy a woodchipper.

We’ve probably reiterated this point in The Front Line more than any other: Stick to your program. Assuming your measurements indicate your program is achieving the desired results, let it run. It takes a minimum of seven impressions to create significant recall. If frequency is your best friend, consistency is runner-up. If your program is not achieving desired results, modify it. But don’t abandon it. Think about your own health: You might feel better on day two of a ten-day course of antibiotics. But you won’t cure what ails you if you stop there.

The Prognosis is Good

The post Take Two and Call Me in the Morning appeared first on Journal of Insurance Operations.

Recently, Marc Dutton, Managing Director of FJA-US, sat down with Mark O’Brien, founder and Principal of O’Brien Communications Group, a member of the editorial board of the Journal of Insurance Operations, and author of The Front Line. They met to discuss the future of product distribution in the healthcare market. This is a transcript of that discussion.

O’Brien: Needless to say, the healthcare industry is all abuzz about reform, regardless of the fact that, at present, there is little definition, let alone direction. Yet even though this political football is yet to land, let alone be implemented in some systemic, systematic way, the talk goes on. I saw on Facebook just yesterday an announcement of an NPR program about how choice architecture should be considered in setting up the state-by-state health insurance exchanges where Americans will be buying health insurance online. Will the horse ever catch up to that cart?

Dutton: It’s clear that a multi-distribution environment is on the horizon. What’s unclear is the nature and availability of those channels. Nonetheless, it does seem fair to expect that the future of healthcare will have to support a multi-distribution environment, catering to increasingly sophisticated consumers who want to buy direct, who may want do their own research, or who may want to use advocates or brokers in an exchange to do the comparative samplings.

O’Brien: Is it equally fair to say this is more a matter of preparation than of inevitability? In other words, we may not know precisely what’s coming, but we’d better be prepared, no matter what.

Dutton: I think that’s right. Companies are going to have to be able to adapt and look for opportunities for things like co-branding and white-labeling, in which they’re manufacturers looking for alternative distribution channels for their products. And the challenge is compounded by the fact that they’re not optimizing their opportunities in existing channels right now.

O’Brien: What does it mean to say alternative distribution channels?

Dutton: It could come to a point at which insurers can distribute products through big-box retailers or commercial associations with large consumer bases to which they can market, based on the information provided by those retailers and associations. Insurers will have to be able to manufacture products rapidly and create multiple product variations and plan designs into the market – to operationalize the information they get very rapidly. Regardless of model, insurers will have to be able to cater to it.

O’Brien: We’re seeing urgent care centers partner with the Aetnas and the Cignas of the world. Wal-Mart’s jumping into healthcare, looking to expand their clinics, and involving other healthcare companies. And there’s talk about convergence of payers and providers, which gives companies like Kaiser a shoo-in advantage in that area. Do you think we’ll see more of that convergence in the insurance industry in general?

Dutton: We’ll see some convergence, yes. Whether the entire industry buys into that model, or can afford to, I don’t know. The bigger players will want to control both sides of the equation. I actually see other possibilities in which we go back to the future; and healthcare insurers converge with life and property/casualty insurers to offer something like a global superstore. With a lot of risk data based on their medical experience, the cost of underwriting would go down; and they’ have better control of the customer. I also believe the ultimate winners will be those that find niche ways to differentiate themselves, look to tap additional premium from consumers, and bring full consumerism to the buying lifecycle, starting with healthcare.

O’Brien: Looking at the ways in which technology is becoming a bigger factor in the equation – things like mobile and tablet apps, as well as the fact that doctors are using apps to communicate with patients – do you think technology is going to play a bigger role in this whole idea of healthcare consumerism?

Dutton: It’s a double-edged sword. Any marketing-driven organization is likely to jump on mobile and tablet technologies in the perceived need to make things flashy and to present their products in presumably favorable ways. Life is easy. Everything’s new. On the other hand, those kinds of organizations typically concentrate on the front end, making it easier to distribute their products. But they don’t think about sustainability and scalability. They put their standard product out there on those devices, not considering what it means for back-end processing, administration, pricing, and enrollment.

O’Brien: Be careful what you wish for.

Dutton: Exactly. In the little picture, the next time policies cycle, even if something as simple as a change in deductible becomes necessary, they’ll face problems and costs they never saw coming. In the bigger picture, if they don’t look at their overall operational platform – if they don’t unify it to enable efficient manufacturing – they’ll be out of the hunt.

O’Brien: In a game that will be changing quickly, it could be game over equally quickly.

Dutton: It’s true. I don’t mean to be alarmist about it. But consider this, too: If those same companies aren’t using their data to develop BI and other ways to monitor and measure their performance, how in the world will they be able to recognize – let alone nimbly pursue – market opportunities or un-served niches? How can they be competitive on price, let alone improve profitability? Going after me-too exchanges and neglecting to differentiate, to anticipate change, to improve operationally, and to contemplate their longevity is going to leave some insurers pretty vulnerable.

O’Brien: Websites exist already – I won’t name them – that purport to offer a service that enables you to type in your needs, the coverage you want, the deductible you want, and the premium you want to pay. Then some kind of search engine goes out on the Web to review plans and serve them back up to you as options. Are insurers fully capable of doing that today – or is more advanced technology required to do it right?

Dutton: The technology needs to advance. What they do today is some combination of catch-all and brute force. They simply prepackage myriad plans with different deductibles, coinsurance, and riders for things like maternity, prescriptions, and such. The engines simply find the combinations searched. Now advance that a few levels of complexity: Imagine you create a product with particular deductible, coinsurance, and co-pay amounts and you opt to offer it in 50 states. The math says you’ll have more than 1,000 permutations possible permutations for which your technology hasn’t accounted – and that’s just in the first year. What do you do now?

O’Brien: I’d consider panic a perfectly rational option.

Dutton: Depending on the commitments you’ve made, panic might be your only option. The only remedy is preemptive and preventative. Insurers have to think more dynamically. They have to be prepared to respond to increasingly knowledgeable and discerning consumers. They have to be prepared for health advocates and brokers looking for custom plans. They have to be able to tailor all their products for multiple jurisdictions. And they have to do all that nimble, quickly, and automatically.

O’Brien: Thinking dynamically, preparation, nimble responsiveness, and technical automation are relatively vague notions. Can you give a specific example?

Dutton: Sure. Consider the limitations in the way products are defined: They typically have fixed cop-pay increments — say five dollars or ten dollars — and/or fixed HSA amounts — say $1,500 or a $2,500. Then consider what would happen if the consumer were able to tweak those two items to achieve the right balance of risk and reward in the price point. These things are possible today. So, if a $1,600 HAS reduces the premium a bit, why not do it?

O’Brien: Because companies just don’t think that way?

Dutton: Exactly. What we’re talking about is getting away from the norm, meeting customers’ needs directly by utilizing technology. It’s about companies looking at the way they do business with their customers, rather than simply trying to retrofit existing ways of doing business in a new environment. Operational capability is the point at which technology and consumerism converge to give the best customer a better experience. And, as they said on The Six Million Dollar Man, we have the technology to enable that operational capability.

O’Brien: Given that the technology exists — and while it’s possible that more sophisticated consumers may be less likely to shop on price — might there be an emerging distribution channel through financial-services companies other than insurance, nevertheless?

Dutton: We’re part way there already with HSA accounts, and it actually began all the way back with CDHPs [consumer-directed health plans]. The real question is whether the financial-services companies want to get involved in calculating the liabilities of premiums plus deductible, co-pays, and other aspects of their overall financial exposures. It would require more of an education about comparative rating. Those institutions would have to know the what’s important to consumers so they could bring mass customization to individuals. It feels like a stretch right now.

O’Brien: Going back to the topic of exchanges, I wonder what the real opportunities are there. The public exchanges will be defined such that, at any given level – gold, silver, bronze, or whatever they may be – the price is the price, and insurers will have to differentiate by coverage options. Am I missing something? And are there any advantages, relatively speaking, to insurers in private exchanges?

Dutton: I don’t think anyone knows yet. I only know there’s a great deal of uncertainty around public exchanges right now. As they say in sports, it almost feels like a game-time decision. But the nature of the game hasn’t been decided, and the rules haven’t been written yet. Ironically, I think the uncertainty is a clear indication of where we actually are: Public or private, insurers don’t know what parts of today’s market will survive and/or how they’ll participate. But this much is clear: Given the fact that the distribution landscape certainly will be different, insurers need to become the efficient manufacturers I mentioned earlier. And they need to maximize their distribution opportunities while becoming nimbly able to respond to all of them.

O’Brien: I’d imagine you’re seeing a lot of fence-sitting in the insurer community just now.

Dutton: It’s true and understandable. But it’s not terribly prudent. They’re wondering how – or if they’ll be able to – quickly package products, as yet undefined, and make money. I’m afraid that may be disastrously shortsighted.

O’Brien: How so?

Dutton: Regardless of distribution model, this remains true: What you file is what you sell is what you service. Only after that do you decide what product to sell and in what channels. And you need the infrastructure to support those decisions efficiently. Otherwise, you’re falling behind your competition instead of retooling your manufacturing plant to take advantage of this new world.

O’Brien: So, look at the consumer first.

Dutton: You have to. Can you imagine Walmart developing or taking on a product line without having any idea what consumers want? Never happen. And as health insurance gets closer to retail distribution, insurers that are looking to repurpose existing plans for the retail environment will be lost. They need to have reusable inventory ready to roll benefits into any plan that fills a customer’s need.

O’Brien: That puts your comment about disastrously shortsighted in a whole new light.

Dutton: I don’t mean to be alarmist. But insurers will have to be ready to operationalize everything from point-of-sale through claims almost on the fly. They should be using this time to get ready for that, rather than worrying about the plan specs they might package for a particular price point. There’s a real opportunity here, especially with MTM scores and pricing pressure.

O’Brien: Can you elaborate on the MTM a bit more. What are the pressures there?

Dutton: For the sake of political correctness, let’s say that, as an insurer, you have someone who’s not part of your business telling how to run parts of it. So, you set your premiums based on plan specs, underwriting and actuarial data, and claims history. Then this someone else imposes guidelines for what you spend, as a percentage of premiums, paying for actual healthcare, ostensible Member Touchpoint Measures, or MTMs. And this someone else knows nothing about what’s required to develop, administer, and distribute your business. That’s pressure. And the bottom line is that you’re not efficient, you won’t be able to adhere to MTM score requirements or even play, let alone compete.

O’Brien: Greater efficiency, greater competiveness.

Dutton: Quite so.

O’Brien: We’ve been talking about consumer-facing distribution options and better-educated individual consumers. But much of health insurance is provided through employers. And, in my days in health insurance, upwards of 90 percent of large-employer insurance transactions were conducted through brokers and consultants. So, how does what we’ve been discussing pertain to employees who have employer-provided plans, as well as the insurers that have to provide those plans?

Dutton: In all instances, distribution will have to be a natural byproduct of operations. If you’ve created the well-oiled manufacturing environment that enables you to build product and plan variations quickly, it then becomes a much more simple matter of deciding which distribution channels to serve. And for employers, it’s an opportunity to look at base plans, ever-more flexible options, mass customization, and up-selling benefits and services the group doesn’t want to offer as add-ons. That’s especially important for employers who won’t be able to afford the premium coverages they once offered. And isn’t that just another distribution opportunity for the insurer?

O’Brien: I think it’s fair to say health insurers have often had knee-jerk – as to opposed to preemptive – reactions to trends in the marketplace. When I worked for a health insurer that shall remain un-named, the single event that caused that business to fail was its knee-jerk response to what was at the time called managed care. Gone. If that company had spent more time reading the writing on the wall, rather than its own press releases, it might still be with us.

Dutton: While that’s clearly a worst case, it’s also correct. We don’t know whether consumers – buying individual plans or selecting group plans – are going to favor web-based, pre-packaged, or Chinese-menu approaches, regardless of their levels of sophistication. Whether consumers undertake the requisite research themselves or get an advocate or a broker, whether they want prepackaged or custom plans, or whether they belong to some kind of association, insurers will have to provide the right products through many different channels. They need to recognize that anything like a mono-distribution method is gone. They’re simply going to have to accept and embrace education, expanded operational capabilities, and the technology that will enable those capabilities. That’s not to suggest that technology alone will solve the problem. But the problem can’t be solved without the agility technology can enable. The stakes are as high as market share and survival.

The post The Future of Insurance Distribution: An Interview appeared first on Journal of Insurance Operations.

Regular readers of The Front Line might remember the first caper I reported in these pages. If not, don’t worry. Most folks forget me almost as fast as my ex-wives do.

In case you did miss the earlier case, I’ll fill you in: I’m a private brand detective. Most of the mysteries I’m hired to solve have to do with companies that vanish. They think they’re there, but they’re not. Sometimes they notice. Sometimes they don’t. Most of the time they don’t even think about it. Here’s an example:

A software-development company with an established brand in one industry — we’ll call the company ZoogerWare — had decided to enter another, unrelated industry, in which it had neither sold software nor established a presence. They did no marketing, no advertising, no direct mail, no nothing in the new industry to support their entry or to introduce their new offering. They did, however inscrutably, hire a telemarketing firm to cold-call companies in their new target market for an entire year. At the end of the year, these were the results from the phone calling, tidily arranged in a spreadsheet by the telemarketing firm:

• Most consistent response: “Who?!”
• Number of companies called that recognized the brand: Zip.
• Number of sales: Fuggedaboudit.

The folks at ZoogerWare were aghast. They hired me to shake some bushes and find out why they’d whiffed. Already knowing why, I accepted the gig, went to visit ZoogerWare World Headquarters, and immediately endeared myself to the braintrust there by asking, “What did you expect?” Thanks to their advice, the door did not, in fact, hit me where the sun doesn’t shine on the way out. But it’s a good thing I’d collected my fee upfront.

Regardless of the way the ZoogerWare case ended, it didn’t matter. I’d been in such similarly thankless spots before. Trying to explain to jamokes like the wizards at ZoogerWare why they tanked is like trying to discuss the philosophy of Friedrich Nietzsche with a kumquat. You can do it. But you really have to lower your expectations.

Ominous Beginnings

My phone rang. Since it was Saturday, my gal Friday was out of the office. I’d come in just to get some peace, since my soon-to-be-next-ex-wife was making things less comfortable at home than a cheap suit after a monsoon. I picked up the phone. A male voice said, “O’Brien, I’d like to schedule my Brazilian Bikini Wax.” Look. I understand everybody’s a comedian. But what the hell happened to original material? I said, “You’ve already lost my attention, Einstein. If you need my help, the next two words you say better be good.” He seemed to gasp, “It’s gone …,” and the line went dead.

I immediately dialed the phone company to ask if they could identify the source of the call. A woman who apparently got her customer-service training from the U.S. Postal Service eloquently replied, “No.” Recognizing the psychological profile, I said, “Let’s try this, Sugar: When you send me my bill, it has all the numbers and their sources on it, right?” The answer was a rather snippy, “Of course … Sir.” I continued my line of inquiry: “Could you email my bill to me right away?” The dollar signs practically floated from the phone as she lilted, “I just hit ‘send.’”

The Chat

As soon as I got the bill, I ID’d the source of the call as one Intergalactic Data Services. A quick Google search informed me that IDS delivered functional applications and data-analytics services to the insurance industry from the cloud; although, their particular cloud happened to be in the atmosphere of Pluto. I imagined I’d pick up a ton of gum on my shoe on a trek to Pluto; but as long as their checks were issued from a bank on Earth, I didn’t care. I called the originating number on my phone bill. A receptionist answered: “Intergalactic Data Services. How may I direct your call?”

I said, “I just received an odd call from a guy who made a lame joke, said ‘It’s gone,’ and hung up.”

She replied calmly, “Oh, that must have been Mr. Johnson.”

“Who’s Mr. Johnson, and what’s gone?”

“Well, he was our Vice President of Sales & Marketing. What’s gone is his job.” She said it so coldly I couldn’t decide if what I heard when she was speaking was dentures clacking or ice cubes in her mouth.

“What happened?” I asked, suspecting the answer already.

“He didn’t make any sales because he didn’t do any marketing.”

If IDS had let that happen, there was no chance they’d hire me to solve this case for them. They’d just hire another stiff into the same position, saddle him with the same misguided expectations, and grease him when he didn’t fulfill those expectations. But some circumstances require a little investigation anyway, even if it’s only to satisfy a morbid curiosity. Since it was Saturday and my gal Friday wouldn’t be in till Monday, I decided to do some digging, even if it took me into Sunday.

The Sanity Check

I called my buddy, Millwood, at The Insurance Bugle:

“Millie. It’s O’Brien.

“What’s up, OB?”

“You ever heard of a company called Intergalactic Data Services?”

“Yeah. Matter of fact, we’re preparing a piece on ‘em for next month’s edition.”

“Really? What section is it running in?”

“The obits. Those dudes were DOA.”

“Thanks, Millie. I’ll get back to ya.”

“Any time, OB, as long as you’re buyin’.”

I hung up and went to work. Calling my contacts at some of the companies IDS was likely to have targeted, I got the same story from all of them. It went roughly like this:

Them: “Some clown named Johnson called me up, told me he was from IDS and he had an offering that was out of this world, and asked me if I was ready to make a deal that would turn my business around.”

Me: “Had you ever heard of IDS?”

Them: “No.”

Me: “Well, it least he was right about the out of this world part.”

Them: “Wadda ya mean?”

Me: “Never mind.”

Sometimes, it just doesn’t pay to get into explanations with people if whatever it is you’re trying to explain has anything to do with Pluto.

The Hard Truth

Anyway, it turns out that when IDS first decided to bring its offerings to Earth, in addition to all the other things they didn’t do by way of advanced preparation — exactly like our friends at ZoogerWare — they didn’t even send a PR puke ahead to tell the odd trade editor or reporter like Millie they were coming. So, they showed up from the vacuum of space into an equally vacuous market. No awareness. No recognition. No brand establishment. No chance. No wonder they lost their Johnson.

What’s worse is that IDS and ZoogerWare aren’t isolated cases. I see this kind of thing all the time. Companies fall so in love with their products and services that they expect everyone else on the planet (or, in this case, other planets) will share their infatuation. But that’s not how it works, kids.

Before I matriculated in the School of Hard Knocks, I once took a course in political science. The two things I managed to retain from that course are (1) there is no power without authority, and (2) there is no authority without legitimacy. Likewise, as it pertains to branding:

• Successful brands have to be legitimized. Who needs to know about the brand and believe in it? Why? How will that legitimacy be established?
• Once legitimized, brands start to establish authority. They’re heeded. They become attractive and persuasive. They engender trust and loyalty.
• Having established authority — having accrued marketshare and revenue — brands come to power, wielding influence over their customers, their prospects, and their markets.

Establishing a brand’s power is hard enough. Maintaining that power is even harder. The work is strategic. It’s never-ending. It requires vigilance. And it demands acceptance of and responsiveness to change. If you don’t have the appetite for that kind of work and those kinds of vagaries, you probably should take up plumbing. Speaking historically and scatologically, there’s not much room for change in that profession.

Epilogue

Millie and I were seated on our usual stools at the bar in the Bent Elbow. He asked me if I’d ever tried to discuss Nietzsche with a kumquat. I said no — but told him I’d come close. He nodded thoughtfully and asked: “Why do you suppose so many otherwise viable brands disappear, OB?”

“I don’t know, Millie. I think it’s because the people responsible for them believe their own PowerPoint presentations, even though no one else has ever seen them.”

“I’m not exactly in your line of work, OB. But even a schlep like me could figure out that’s not gonna work.”

“I hear ya, Millie. All I can tell ya is that most folks aren’t willing to invest the time, the money, or the sweat equity to establish their brands. So, the brands disappear.”

“Is it that tough?”

“I don’t know that it’s necessarily tough. But it requires commitment. Ya gotta have the stomach for looking ahead, laying the groundwork, staying the course, and making the necessary adjustments. Like dealing with ex-wives, kumquats, Plutonians, and getting old — branding isn’t for sissies.”

“I’ll drink to that, OB. Barkeep!”

The post The Case of the Missing Brand appeared first on Journal of Insurance Operations.

Let’s start with the obvious: BI depends on data. To be more pointed, it depends on your data. And to be utterly precise, it depends on serviceable data, by date and type. There. Now that we’ve gotten that out of the way, we can move on. Why move on? Because if you want meaningfully instructive BI, if you want BI that will help you direct and improve your business, and if you want to create an environment in which every decision is made on the empirical evidence of accurate BI, sooner or later you’re going to have to cross the conversion bridge. So, we may as well take the direct route.

“But I thought ….”

That single opening phrase has been the response to untold numbers of failed undertakings. In the insurance industry, it’s frequently uttered after neglecting to consider the necessity of data conversion in the replacement of core systems. Let’s say you’re replacing your claims administration system. Historical data for all of your claims are tucked safely away in the mainframe that’s been chugging away in the back room for decades. It’s pretty comfortable in there. But it’s going to have to set up shop in the new system if it’s going to be usable to you. That leaves you having to determine what data to convert and how to convert it.

That determination requires as much foresight as hindsight. If you opt to convert all of your open claims, what happens if a claim that wasn’t open at the point of conversion reopens? Oops. Now add some complexity: You convert your claims, and the reporting period on them is six months, two years, or three years beyond the date of the policy. How much policy history should you convert? If you have to convert policies for all the open claims, what happens to the policies for claims that may reopen? What happens to a claim that gets reported after the conversion against a policy written before the conversion? Hint: Think BIG headache.

“A Man’s Got to Know His Limitations.”¹

Where, then, is the limit on the amount of data you opt to convert? There’s no right or wrong answer to that question. But you do have options: You can convert absolutely everything for migration to the new system. You can create paper copies of everything in case you have to look something up. You can maintain your old system for some number of years until you’re sure you won’t have any more claims against the data in it. Or …

You can create an enterprise-wide BI environment, complete with a data warehouse in which to store details from all of your policies and claims (depending on the fields you opt to bring over). No system-replacement worries. No data-conversion worries. No chronological worries. Should a claim reopen, you have the policy information about that claim, what was covered and not covered at the point of claim, and you have the policy record (with details of coverages, limits, riders, and deductibles) without having to depend on an old system that you may or may not be running – or in which you may or may not be retaining data.

The upshot? In a BI environment that includes a data warehouse, you don’t have to configure your new core system for all the old business you used to do – or for all of your old ways you used to do business. You don’t need to configure it for all the old limits and deductibles and surcharges that are no longer in effect. And you don’t need to configure it for all of the old rating factors.

“Just the Facts, Ma’am.”²

Beyond that, for analysis and reporting purposes, you need to have data available. In a BI environment with a data warehouse, you’ll have that data at your disposal, without encumbering your transactional database with data and configurations that could slow down your response and delivery times. You’ll also have it in a normalized, standardized state, eliminating the need to convert the data again, at a later date, should you implement another new core system. It’ll be more organized, better structured, and more conducive to providing the business facts you need, when you need them.

You’ll know what given policies looked like at the time claims are made against them. You’ll be able to open old claims to assess losses, without knowing every diary entry. If you get a data call on your old business – or if one of the bureaus or regulatory agencies comes back and asks for a report on a transaction or piece of business – you’ll actually have the data on which you reported the first time, rather than having to rely on memory, detective work, and educated guessing.

“Get Into the Now. You Might Not Fit Into the Later.”³

If you’re considering an enterprise-wide BI environment, don’t wait till you’re undertaking a system replacement to consider it. If you create the right environment with the right data warehouse, you can convert your data once and once only. Then you can replace all the systems you want without having to worry about your data again.

In fact, if you treat the data warehouse as something like middleware, you’ll always be sure that all of the data in it is tested, validated against your current system, organized, consistent, and ready to be integrated with any others, new or existing. That also would provide flexibility during system transitions, enabling you, for example, to migrate open claims that have long tails – or migrate policies as they renew. You could then sunset old systems for specific reasons, over specific periods of time, making systems and operational planning much simpler.

“Let us not go over the old ground, let us rather prepare for what is to come.”⁴

The only old ground that needs to be gone over in the contemplation of data conversion and BI is your data. That data constitutes very fertile ground, indeed. And converting and analyzing that data certainly can prepare you for what is to come.

Appropriately converted data – appropriately analyzed and presented in reports, scorecards, and dashboards – will reveal intelligence that will inform and help direct and improve your business. It will help keep you from situations in which you’re sheepishly saying, “Yeah, but I thought ….” And it will ensure that all of your critical, dated data is safe – and available in timely fashion – whenever you need it, for whatever you need it.

¹ Dirty Harry, Magnum Force
² Joe Friday, Dragnet
³ Maharishi Mahesh Yogi Bear
⁴ Marcus Tullius Cicero

Aviva Philips is SVP, Insurance Products – and Justin Silver is SVP, Business Development – at Yodil, Inc.

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