Viva Aviva:: McMillan deserves high praise for ‘Systems Thinking’ strategy
Monday, 17 September, 2012 1 Comment
I like to think that I keep my finger on the pulse of what is happening (or not) in the UK general insurance industry and I am ashamed that, perhaps the most significant change in recent years, has completely passed me by! I can only attribute this to a form of blindness brought on by years of short-lived, occasionally ludicrous, strategies and initiatives launched by past Aviva management and that sapped the morale of their employees and saw them shed good business in favour of large premium commitments…many containing unknown exposures!
Perhaps I should have dug a bit deeper when they took a stand against Towergate earlier this year. I can only claim that my cognitive bias was brought by having to listen to a former “leader” – surely a graduate of the same business school as Fred Goodwin!- attempt to spin (that is as polite as I can be) strategies that were patently spawned by the unholy triumvirate of GREED, FEAR & EGO.
The dangers of linear thinking in a non-linear world
Perhaps I should clarify. Strategies that led to year after year of blatantly: chasing market share; of slashing costs; abusing long serving, committed and capable staff; outsourcing and offshoring without any real consideration of the needs of customers or brokers; supporting and over-remunerating selected brokers – fellow believers in the high growth (without conscience) model – through abandoning sound underwriting, under-pricing, dual pricing and contributing significantly to the consolidation of the UK broker market.
In short, replacing relationships, built on trust with the purely transactional variety. Damaging the brand of the new company and disrespecting those that had, independently, over many years, served as quality marks for our industry. But also at the expense of professional brokers whose longstanding, client and insurer relationships had been the mainstay of the stable, if unspectacular (in growth terms), general insurance distribution model. It wasn’t perfect but it was a whole lot closer to what David McMillan is now trying to achieve..
This is a major step for an insurer and I am happy to declare that my (well founded) perception of Aviva has changed dramatically…maybe not quite through 180 degrees but are fair part of the way…as a result of this insight. There are many of my friends and former colleagues who wont believe this possible but I would remind them that I try to be open-minded and that my mind is much easier changed than is a Corporate culture that had done so much damage.
I’m not sure the extent or the practical applications of ST in Aviva’s operations but I am very keen to find out because, if there is a growing understanding of systems, it may not be long before a deeper understanding of complexity and the need for INTERDEPENDENCE leads to policyholders, brokers and partners being viewed as stakeholders.
These could be the first steps on the path to greater TRANSPARENCY and, through that, (re)building stakeholder TRUST.
Beyond this, embracing the thinking and tools that enable risks to be rated according to a measurement of current RESILIENCE – rather than the narrow and, dangerously, misleading view of a future modelled on risk – with the benefits of anticipatory awareness, extending the conventional risk horizon. After all, the best way for an insurer to increase their own profitability is to improve their ability to identify, rate and retain better quality risks and to cultivate a culture of loss prevention amongst its stakeholders!
This is a subject matter that I have immersed myself in over the last few years and have been endeavouring – with no notable success – to communicate to the insurance, financial and risk management industries. So, although I cannot lay claim to inspiring or contributing to this worthy initiative, I am just grateful that (at last) the blinkers have come off, at least, one industry leader and hope that (as tends to be the case) others follow suit. If/when they do I will be delighted to assist!
If Systems Thinking is being truly embraced and applied, there will be an understanding that RESILIENCE is a fundamental for any system to be deemed to be truly SUSTAINABLE and this is what we ALL need to focus upon.
Aviva re-engaging with employees and, in the process, gaining competitive advantage from a genuine “Blue Ocean” strategy, will, I’m sure, provide the ‘clear blue water’, between them and their short-sighted competitors, that David McMillan is looking for. For his sake and the sake of the industry I certainly hope so!