Value Networks are our shared future

Love networks loathe “networking”! This article could go so much further about highlighting the benefits for formalising a stakeholder network as a “business community” for closer co-operation, collaboration and, in time, co-creation!

So we have a “dysfunctional” motor market…or is that just the tip of the iceberg?

MY point is that, whilst steps are now being taken to tackle this problem the fact remains that, as usual, it is the “customer” who foots the bill.

Sadly, it is a similar story when it comes to dealing with household claims, except that the lawyers have been replaced by insurer-sponsored Repairer Networks and nationwide franchise operations. Their interest is in recovering the margin (and more) – squeezed out of them by insurers in return for “approved repairer” status – by cutting corners or inflating reinstatement or repair costs on multiple claims.

Both of these scenarios are “extensions” of the practice – that has exploded in the commercial insurance market in recent years – of paying brokers excessive and unsustainable commissions to sell and service their products.

Get "fit for randomness" [with Ontonix UK]

Insurers are so desperate to maintain GWP that they will forego underwriting profit in its pursuit!

Every time the premium bar rises it benefits them but hurts individuals, households and businesses…in short the whole economy! This is how skewed the “logic” of the prevailing culture in financial services has become. And, believe me, they are comforted by the fact that Politicians, FSA and the general public concern themselves with “effect” rather than dealing with “cause”:

A morally corrupt corporate culture.   

The secondary industries that have sprung up around insurance claims – in particular motor accidents – bear testimony to this culture. Massive costs come back around to policyholders in the form of increased premiums. No surprise there then but did you know that much the costs come about as a result of insurers’ desire to secure income from lawyers who are happy to pay for details of claimants. Still not…

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Moral Warfare:: a fight that the “pure of purpose” can win


OODA (Photo credit: Wikipedia)

I gather that “The Art of War” by Sun Tzu has, once again, become a popular read. If you have read it, this may come as no great surprise as it is fair to say that, despite some “iffy” translations prior to 1910, it has stood the test of time.

But, since beheading people to establish one’s authority is frowned-upon in these politically correct times(!?), I would recommend seeking out a latter-day “master strategist” by the name of John Boyd. You may have heard talk of AGILE BUSINESS [the embedded link is for anyone in insurance] and wondered “what the hell does that mean” or dismissed it as yet another creation of fee-hungry management or IT consultants!

But hold your horses…stick around and you might learn something that could serve you and your business VERY well indeed.

Q. what is the difference between derivatives and reinsurance?:: A. not a lot…

At least that is the view of a man who knows a thing or two about both…Warren Buffett! Of course this quote is, by now, well known:

“In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

But this isn’t all that he had to say and, until someone convinces me otherwise, his view lends further (substantial) weight to my argument that (re)insurance institutions ARE “globally systemically important” with the potential to act as “superspreaders” as/when the next stage of the ongoing financial crisis unfolds.

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“Never in the history of the world have we faced so much complexity combined with so much incompetence and understanding of its properties” Nassim Taleb [Black Swan].

Without the appropriate tools complexity is unseen: it is both problem-solving capability and, unmanaged, has the capacity to destroy a business [system] from within.

When it comes to reducing the “noise” around signals, upon which our shared-future may depend, they don’t get more effective that Nassim Taleb and, the late, Benoit Mandelbrot. This interview from 2008 is well worth re-visiting.

But so many appear totally absorbed into the prevailing culture that they have their eyes on the “prize” of extrinsic rewards, such as sales commissions or other financial rewards that, admittedly, do work well when a task simply requires people to follow a formula. However, according to research cited by Dan Pink, for jobs that require complex or creative thinking, extrinsic rewards can be dangerous, because they tend to restrict people’s ability to notice things on the periphery and craft novel solutions.

The inability to discern SIGNAL from NOISE when we are, increasingly, suffering from information-overload is, perhaps, understandable. But it can be a tell-tale sign that a business is overlooking or ignoring vital signals from its environment [marketplace; ecosystem] or that the ability to interpret is impaired…whatever the excuse the signals are aplenty but it does require an acceptance of the need to look and to LISTEN.

“Never in the history of the world have we faced so much complexity combined with so much incompetence and understanding of its properties” Nassim Taleb.