Continuous Improvement as Competitive Advantage

Let's talk about what's keeping you up at night.

If you could change anything about your business, would you, and what would it be?

Oh, wait. You can change anything about your business. It's your business. Political rhetoric notwithstanding, you don't need to wait for the government to do something for you. Or to you.


Think about all the things you could do differently in your business that would increase your profits.


Think about all the changes you could make to your customers' experience, resulting in more and better referrals. Would that increase your profits? Think about all the changes you could make to your teams' effectiveness, resulting in more and happier customers. Would that increase your profits?

But change is hard. Oh, it's not hard to talk about change. Think about how hard it is - how long it takes - to break a bad habit. (Forever?) Or to replace a bad habit with a good habit? (21 days, so say the behaviorist experts.) It's not hard to tell someone else to change. But think about how long you've been trying to get ____ (someone)___ to do __(something)__ differently.

The kind of change that's going to make a difference to your bottom line has to be a special kind of change. It has to be positive change that makes it easier for your customers to do business with you and easier for your team to do the right thing for the customer. When you and your team are always looking for that kind of change, that's continuous improvement, and it gives you a competitive edge.

If you can see an opportunity and be able to line up your resources or change your strategies to be on the leading edge. If you can understand a threat for what it is and take action to avoid the common pitfalls. If you can make adjustments in your operations or your organization to maximize strengths and minimize weaknesses.  Doesn't this give you a tremendous advantage in the marketplace?

Being eager and willing to make changes does come with a caveat. Change for its own sake is not a productive strategy. Making too many changes that don't work or don't "stick" will chew up resources and demoralize your staff. So to ensure the right balance of continuous improvement and consistency, do some strategic thinking before you make any major change. Make sure that any change can pass this test:

• Is this change Strategic? Will it help you achieve one or more of your strategic goals - or at least move in the right direction?
• Can you and your team Implement this change? You want to be able to understand clearly what it will take - who is going to do what by when - and then what will need to happen next. If you can't see your way through the implementation, you should reconsider whether you want to start. (Really can't say this strongly enough. If your team feels they are always starting never to finish, they will give up trying.)
• Does the change Matter? Will making this change make a difference for the customer? For your team? If the outcome will be invisible, you will get no return on your investment.
• Will the outcome be Positive? Think through the costs, the consequences and the expected outcomes. If there's no real benefit then don't do it.
• Will the change Last? Will it "stick." Is this one of those things that people will look back on and say, "Hmmm, whatever happened with that?" If the outcome is going to become invisible, you should have saved the trouble.
• Does everyone involved have clear Expectations for the change process and the changed outcome? Of course there will be follow up required - did everyone do their job to get the change made and maintained. If you're thinking strategically about this change, you should be able to create a vision for all those involved. What will their experience be during and after the change? How will they benefit? What will be expected of them? What should they expect?

Continuous improvement is continuous change. In this context, change is good. It's not easy. but it should be simple.


So what will you change?


If a threat or weakness is forcing you to change. If a strength or opportunity is calling you to change. If you are constantly making changes that don’t help or don’t last. If your staff has trouble adapting to change. Or if you want help in putting positive changes into strategic perspective, we can help. Call me, or send an email. No Strings. No Charge.

Operational Excellence As Competitive Advantage

Let's talk about what's keeping you up at night.

Property Casualty 360, June 22, 2012, "GEICO Ad Spending Far Outstrips Its Peers"

A lizard, a caveman and now a possum. GEICO spent far more on auto insurance advertising in 2011 than their competition, both on an absolute basis and as a percentage of the business the company wrote. This, according to a new study released last week and reported by Reuters. With aggressive pricing and heavy advertising, GEICO has quadrupled its market share of the U.S. auto insurance market share over the last 20 years. GEICO's advertising budget represented 6.5 percent of premiums written in 2011.

Anyone who watches  even a little television is familiar with the GEICO brand. And Allstate. And State Farm. You can't compete against these giants by increasing your ad budget. You can't consistently compete against them using price as the competitive advantage. So how do you compete?

Many independent agents say it is their superior customer service that sets them apart. Competing on the basis of service in a 24/7, on-demand, marketplace requires a level of operational excellence that embodies efficiency and effectiveness, employee engagement and customer and customer focus, profitability and business value.  Read more about operational excellence as a competitive advantage here. 

From Theory to Practice

Can you say with confidence that the way you do business gives you a competitive advantage?

If the answer is, "YES!" 

Sustain it. Stuff happens. Take a proactive approach to sustained excellence. Continuously measure, test, improve, measure.

Proclaim it. Make sure everyone in your organization understands the value you bring to current and prospective clients. It's part of your culture. Make it part of your ongoing communications. 

If you're not sure, the the answer is probably, "No.

Find the gaps. Make the investment in time and resources to understand what works and what doesn't.

• Ask your employees. Use surveys, focus groups and one-on-ones to tap into the talent you already have.
• Ask your customers. Get employee feedback on customers, use focus groups, and individual and group surveys to understand what customers want and how well you deliver.
• Review your operations. Start with a checklist or ask for help. If you don't feel you can be objective enough or thorough enough, hire a consultant.
• Measure your results. Focus on business value rather as well as productivity and profitability. Compare to industry averages but only as a way to create your own benchmarks.

Fill the gaps. Use what you learn to build a strategic plan to get to operational excellence. You can't do everything at once and you shouldn't try. Set priorities. Itentify accountabilities - who is going to do what by when and how will you measure results. Involve the entire organization and communicate constantly. 

Think of it as a process. You'll never really be done so be prepared to sustain it and proclaim it as you go.

Do your excellent operations give you a competitive advantage? Are your employees engaged in keeping your customers delighted and bringing more in the door? Can your team deliver on time every time, even when things don't go just right? If you're not satisfied with the answers to these questions, call or email pam@transformationadvisors.com..

Insurance Industry Staffing

Let's talk about what's keeping you up at night. 

"NU Online News Service, Feb 9: Industry Adds Jobs in Dec."

Total insurance-industry employment grew by 5,000 in the last month of 2011. During the same period agents and brokers shed 200 jobs. 200 jobs out of a remaining 646,000 doesn't seem like very many. And the previous month, jobs were added in the agent/broker sector, so there shouldn't be much sleep lost over the employment situation. Unless, of course, it's your agency being affected by the additions and reductions in staffing.

How about your agency? Did you lose staff last year? Was it intentional? If not, did you lose the "right" people? Staff reductions can have a positive effect on the bottom line. But only if you lose a poor performer or someone in a non-critical job. Losing a strong performer or someone in a key position puts you in a dilemma. Do you hire a replacement and forgo an expense reduction or do you ask the remaining employees to take up the slack, knowing you will likely experience a deficit in sales or service ability? Whether the economy is good or bad, you want to make sure that improvements in productivity don't result in the loss of effectiveness.

The difference between productivity and effectiveness is that one is about the numbers and the other is about the people. Improvements in productivity with no loss in effectiveness requires accountability. As the boss, that makes you accountable to ensure that competent, skilled, accountable, individuals want to be a part of your business and you're accountable to ensure that those who don't measure up are the ones to go.

Competent, accountable, employees want to know what "good performance" looks like. They also want to be clear about how performance is measured. They want regular feedback. Employees who meet or exceed expectations want to be recognized. They want a positive consequence. When they fall short, there should be a negative consequence.   No measurement, no consequence, no accountability.

What about employees who are incompetent or unaccountable? The only way to ensure that your organization is accountable is to ensure that there are no positive consequences for poor performance. Rewarding everyone the same hurts two ways. First, you won't see any improvement. Worse, you'll lose the respect, and likely the good performance, of good employees.

Remember that recognition and rewards come in all flavors, some with intrinsic value and some not. There are some few people who take sufficient reward from a job well done. Most of us, however, want something a little more tangible, even if it's just acknowledgement. Since people do things for their own reasons, it's likely that different people will respond to different types of recognition. It just needs to be fair and consistent.  So...

As the boss, you're accountable to make sure there is a formal process for evaluating performance.One that is consistently and meaningfully followed.

Or is that what's keeping you up at night?

Competitive Advantage

It’s pretty clear that the economy isn’t going to bounce right back. But this doesn’t mean that 2011 will be a bad year for business. Now is the time to make the most of your strengths in the marketplace to keep your customers and bring in more.

Why should they buy from you?

Everyone needs insurance. But why should they buy from your agency rather than the agency down the street or online? When you can answer that question - and consistently deliver - you have a competitive advantage.

Read more about  B.I.G. Strategies for Business Excellence - Create Competitive Advantage.

Change is Good - Up to a Point

One of the most often, and often most challenging issues faced by managers is getting change to "stick." A change in process or procedure is agreed to and implemented. Now everyone will do it that way. Right? Well, often, not. Pretty soon, one or more have reverted to the old way of doing it. No apparent reason. No "I don't like the new way so I'm going back to the old way." Folks just slip back to the prior way of doing things. The change doesn't "stick."

Here's a (kind of) scientific explanation for why this is true and why it's so hard to change. Self-Control is Exhaustible

That's why we always encourage follow up as part of implementation. Once the training is done and the change is made, there needs to be provision to regularly - and consistently - check to see if the change is still in place. If there is no expectation of follow-up and follow through, then there is no requirement for self-control - no requirement to stick with the change until it is the new habit.

If you want your changes to stick, you'll have to stick to your changes.

Momentum Matters

Saturday we watched the Marshall University Thundering Herd get beat in overtime by West Virginia. I'm not the football aficionado in the family but even I got caught up in the emotion of this game where the underdog (Marshall) led by 15 points until the last seven minutes of the fourth quarter. The announcers made much of the history of the Marshall team and the "100-year rivalry" with West Virginia. You may remember the 2006 movie "We Are Marshall" about the tragic loss of the entire Marshall team in a 1970 plane crash. But the reality is that no one really expected anything but a win for West Virginia.


What struck me as I watched the game turn around was how dramatically the momentum changed. The Mountaineers quarterback did a great job rallying his team in the fourth quarter but what seemed even more important to the outcome was the fact that the Herd got defensively timid. By the time the regulation clock ran out, Marshall had allowed the West Virginia to score twice and then couldn't score in overtime.


But this isn't just about football. What happened to Marshall happens in business, too. It's very easy to lose momentum - and it's not so easy to get it back. Getting your team on a winning streak takes work. Keeping your team pumped up and scoring takes constant attention. And if there's a shift in the marketplace and the competition appears to gain the momentum, what are you doing to get it back? Well, for certain, that's not the time to get defensive. It's just the time to get back on offense. Those businesses that are struggling to maintain momentum in this economy are the ones who are not playing offense. Now is definitely the time to keep your eye on the ball.


With the uncertainty about future revenue, I've seen a number of businesses pull back on their marketing efforts in an attempt to save money. This may be just the wrong thing to do if you want to maintain the momentum. And successful businesses are taking advantage of the defensiveness of their competition to gain momentum.


Are you playing offense or defense? And how's it working for you?

Producer Compensation – Profitability Drivers

“I’m paying producers too much and it’s causing a problem with bottom line profitability.” Well, maybe. Sometimes it’s not just simply the percentage of commission going to the producer. Sometimes there are other factors that impact profitability.

Part of our Producers as Profit Centers tool looks at servicing costs for each producer book of business. You should expect to see some disparity, especially where CSRs are assigned to business based on producer. Since producer books vary in size, so with CSR books. If those disparities are too great, however, you may need to look at realigning teams to even out the workload. Everyone hurts when some are overworked and some don’t have enough to do.

Sometimes the workload disparity is magnified when there is a big difference in average account size. Account size is probably the most significant of the productivity drivers. Where producers have books made up of mostly small accounts, not only will the book likely be unprofitable but the servicing costs are likely to be high unless a conscious effort is made to treat these accounts differently.

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Uncover Undercover Boss to Get Better Results

I must admit, I'm not a fan of reality TV. It's way too contrived. So I ignored all the hype about "Undercover Boss" as just another in a long line of cheap television. I guess I shouldn't have been surprised to see how may of my friends and business associates actually watched. I was surprised to see write-ups and reviews and posts and comments in many of the business blogs and journals following the first program. And as I read about the program - after the fact - I'm pretty sure I wouldn't like it. Too contrived. And the implication that a good manager was 'set up,' not in the name of improving company performance but as a cheap entertainment trick, is disturbing. But conceptually, the ideas of the boss dropping back into the ranks to do the jobs that employees are asked to do and try to overcome the obstacles that employees are expected to overcome - now that is appealing. As a line manager in s large insurance office, it's something I used to do regularly. And it almost always paid off.

1. First, the process got an objective look. As someone who was trying to follow procedure, and who didn't do the work all the time, I was able to see things about the process that didn't work or didn't make sense. Employees are often too busy to even think about how to what they're doing better or faster or more accurately. And if they do come up with an improvement, they're hesitant to bring it forward.
   
2. Second, and in some ways even more important, the relationships grew stronger. There was always a good exchange between me and the employees sitting around the desk I occupied. I asked them questions and engaged them in my effort to understand their issues. They responded, sharing frustrations and sharing ideas for improvements.
   

I wasn't undercover. Being right out in the open, working side by side with people doing the work I usually supervised, had the potential to be constraining - to make them uncomfortable. It almost never did. They felt more respected. It gave me a chance to show them that I valued their effort as well as their ideas about the job itself - much more so than just saying it.

An engaged workforce is worth more to your bottom line than pretty much anything else you can have in place. People are much more likely to care about you and your company and your goals, if they believe that you care about them - as people not just as assets or liabilities. When your employees care, your customers benefit.

If "Undercover Boss" catches on, will we see more business owners and managers snooping around? If they're paying closer attention to what's really going on in their business, that would be a good thing all around.

Accountability and Hiring and Firing

Building and maintaining a business where everyone owns their own job takes discipline. An agency owner told me he had recently terminated two employees. Not because he was cutting back but because he needed to upgrade his staff. These two individuals just wouldn't follow procedure. They weren't bad employees. They just couldn't sign on to doing things only one way - the agency way. "I tolerated it for too long," he told me. "And I realized last week that if I was ever going to have an organization where people were truly accountable to do things the right way, then I had to do something different. It wasn't easy but it needed to be done."

So now he's recruiting to fill two jobs. For the job market, it's a wash. For his agency - short term - there is some big expense. Hiring and training take time. For the long term, however, it could mean higher productivity and better performance. So, better profit. Higher return on investment. For the economy, it's a win.

Apparently this strategic thinking agency owner isn't alone. Check out this article in the National Underwriter: "Insurance Hiring Continues Despite Poor Economy, Says Expert."

If you're looking for help to make a touch decision about a marginally performing employee, the bad economy might be a blessing for your business. One of the good things about a bad economy or a soft market is that it forces us to be more disciplined.