IBM Global CEO Study 2012:: customer-centricity v industry “eccentricity”

Once you get over any revulsion to the term “customer centricity” it does make really good sense, UNLESS you are one of the many people who can’t see beyond a linear supply chain with customers at one end!

imageI loved the revelation that insurance CEO’s appear to be on-board with the “sentiment”. But then I remembered that, in business (particularly the Financial Sector), there is little scope for sentiment just plenty of time for rhetoric i.e. talking the talk to, such as, IBM, PwC, KPMG, etc.

Customer focus for insurance CEOs means getting everybody involved

  • Employees. “Empowering employees through values” is a key imperative for CEOs in 2012. Technical skills are necessary but not sufficient anymore. Flexibility and communicativeness become the most important personal traits.
  • Partners. “Amplifying innovation with partnerships” means thinking past the traditional partnerships with agents and brokers, to working with third parties in claims remediation and even in underwriting.
  • Finally, the CEOs themselves need to be involved. Customer centricity starts at the top, and 68% of insurance CEOs see customer obsession as the key characteristic a successful CEO needs.

Of course the insurance industry NEEDS to get closer to its customers, because it is good for business – but it is easier said than done at a time when mutual distrust is a huge obstacle. In a recent article, once again, I drew attention to the Annual Edelman Trust Barometer 2012. It ratified the position of the Insurance industry as least trusted. Right there alongside banking!!! This is a pretty sorry state of affairs for a Sector that has, historically, thrived on TRUST.

So, if that is the current state of affairs it would be reasonable to expect that both banking and insurance are making great efforts to repair the reputational damage done over recent years. But, if you thought that, you would be wrong. Happy to listen, talk to Consultancies and each other about it but, worryingly, short on action to address this business fundamental.

They are suffering from, what I have come to refer to as, “Complexity Paralysis”:

We have all experienced it at some time or other. That feeling of too many things to do, too many problems, approaching deadlines, job insecurity, too many masters, too much pressure to “get it right”, to complete the task/project within an unrealistic budget, meet targets that fail to reflect conditions in the marketplace, conflicting or unclear strategies, etc. As an individual this leads to anxiety, underperformance, procrastination, low morale, absenteeism and ill-health. But, as every individual in business, is part of a team, unit, division or some other term applied to a sub-system of a business system, the problems are spread (not necessarily shared), communicated, amplified and fedback, in self-reinforcing loops, impairing the ability of the entire system to function to its capacity.

However, whilst this may explain issues at micro level that have, undoubtedly, affected firms, I believe it serves to divert attention away from THE reasons why the Financial Sector is trapped in a vicious circle of its own making:

TRUST can’t be bought it must be earned. The value of trust is incalculable but its price is paid with transparency and that is a cost that the Financial Sector simply cannot afford!

Over-specialisation (like in-breeding) reduces “variety”, which , over time, impairs the health of the system: fragile NOT resilient.

Too many years of re-engineering business processes, for the benefit of the system [destructive creationrather than the customer [creative destruction], has “dulled” the expative instinct and agility of these, closely-coupled, industries. There is the understanding of the need to adapt – transformation may be a more appropriate term – but, even with visualisation of a non-linear network and the benefits it would bring, there are other obstacles to be overcome: how to effect such a transformation; financial and other resources; lack of operational agility. As a result their ability to survive in a turbulent economy or to thrive in a changed environment is questionable, at best. But the biggest problem is the uncertainty of how to unravel the sheer complexity of the self-serving processes they have crafted over many years!

When there is a lack of vision, “values” only extend as far as marketing material, they cannot afford to be transparent about so much of the back-office, culture and morale, the clear preference is for the familiarity of the status quo, rather than the initial uncertainty of a strategy that is better suited to surviving in a turbulent economy, offering greater consumer and regulatory value: underestimating the impact of uncertainty or assuming that frequency and impact are “known” and manageable is NOT a mistake that responsible C-level Executives should make…without fully considering the distinct possibility that they may be very wrong!

As recently as today (30th May) the CFO of a prominent and, outwardly, successful UK broker spoke about how well equipped they were for the current environment (despite reporting a £37M loss to 8/11) and, as they do not foresee change, were bullish about their future! This is against a backdrop of a global recession brought on by the virtual collapse of the banking systems, increasing EU regulation with the potential for “hard” (commission) disclosure, the potential collapse of the Euro, the resultant contagion, cascading systemic risk and lack of liquidity, as well as consumer calls for greater FS transparency and value.

Surely the man is either a fool or a liar!? Because any one of these events is entirely foreseeable and could be triggered by, relatively “minor”, Geo-Political events across the globe.  But, if, in the event of further financial woes, the Company fails (they have funded acquisition and growth with debt)  – if, it does not I will publicly apologise – he, his fellow Directors, Regulators and the insurers, without whose support they would not have been able to grow, should be prepared to answer some very difficult questions.

My question is: “who wants to know how to overcome the obstacles and to build resilience for a more certain future?”

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