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Goodbye Agent & Broker… Hello Outsourced Risk Manager

December 17, 2018

Editor’s Note: In this two part series, we first examined what it is that your customers are looking for when it comes to risk management solutions. In Part II, we will look at what it takes to overcome commoditization of your product and for you to assume the role of an outsourced risk manager.

Risk and Enterprise Risk Management

Because risk encompasses the possibility that something bad or unpleasant will happen, it is essential that you deliver a systematic means to manage it.  Every business or organization, whether for-profit or not, has one main purpose:  to create value for its stakeholders. These stakeholders include shareholders, customers, employees, suppliers, and vendors, etc.  The creation of stakeholder value is accomplished in many ways including, but not limited to, product innovations, acquisitions, business expansion, and customer experience journeys.  The concept known as Enterprise Risk Management (ERM) aims to ensure that management is able to fulfill its obligation to its stakeholders through goal achievement, such as hitting revenue targets, profit margins, and business valuations.

In the Risk and Insurance Management Society’s (RIMS) book, Enterprise Risk Management for Dummies, Beaumont Vance and Joanna Makomaski teach us that risk management is an art as much as it is a science.  The science involves a structured, systematic means toward risk management, while the art involves your creative flair in delivering this promise.  It is interesting to note that the five-step risk management process was first introduced by an innovator named George Head in 1972:

  1. Identify – During this crucial phase, you invest time to investigate every aspect of the organization in order to help the customer identify the risks that face the business.  This is the process of figuring out what kinds of future events might prevent or slow the achievement of objectives.  Step 1 involves attempting to figure out where, when, why, and how an event may occur.
  2. Assess – This involves judging, gauging, analyzing, and appraising the risks that you uncover.  And it involves the determination of how individual risks are related to one another.
  3. Evaluate – Here is where you ponder the balance between good and bad outcomes, and decide which risks need to be addressed to best protect the organization.
  4. Mitigate Risks and/or Exploit Opportunities – It is here where the risk management process really shines.  Because you have identified, assessed, and evaluated risks, you are now able to explore a spectrum of strategies to minimize risk.  Of interest, insurance fits in step 4 as a “risk transfer” strategy.
  5. Monitor Organizations are dynamic. What works today might not work as well tomorrow.  For this reason, it is paramount that you monitor and adjust the risk management program to ensure success as the business evolves and changes.

The Problem with the Traditional Agent and Broker

Today’s consumers have come to believe that the primary role of the agent and broker is delivering products and services dominated by the insurance transaction.  They do not see the evaluation of risk as the agents’ and brokers’ top priority.  They see them selling insurance.  And for this reason, commoditization occurs. Commoditization is devastating as the consumer perceives little or no difference between products, services, and resources.  When this happens, price becomes the primary point of differentiation.  Picture commoditization as a disease that eats away at your knowledge, wisdom, and professionalism.  It is so cruel and debilitating that it strips away the value proposition of even the most seasoned insurance professional—his or her reason for existence – to a number.

The solution: the outsourced risk manager.

The evidence is overwhelming.  Today’s consumer is demanding that you step up your game and serve them in the same way a chief risk officer serves his or her multifaceted organization.  They are demanding a disciplined approach, planning process, and service standards that differ significantly from the traditional agent or broker.  And most importantly, they expect you to begin each engagement with a blueprint focused on the identification, evaluation, and measurement of risk – an enterprise-wide, diagnostic risk management evaluation.

I would like to suggest the following 10 steps to becoming an outsourced risk manager:

  1. Understand your natural approach to creative problem-solving.
  2. Expand your understanding of HR, safety, and risk management issues.
  3. Live the risk management process.
  4. Demonstrate a proficiency in researching a business in this industry.
  5. Master the art of exposure identification and risk mitigation.
  6. Understand the importance of strategic planning.
  7. Reassess the tools you have in your agency’s tool box to support enterprise risk management.
  8. Institute methodologies to monitor the results of your interventions.
  9. Realize that the insurance bid is encompassed in step 4 of the risk management process.
  10. Appreciate the fact that insurance (risk transfer) is only one of many risk management strategies.

The opportunity of a lifetime

The opportunity of a lifetime is sitting in front of you through the adoption and execution of the risk management process.  As you commit to becoming an outsourced risk manager, you will gain purpose and passion as never before.  Goodbye Agent & Broker…Hello Outsourced Risk Manager.

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

Opportunities for a New Type of Agent

December 12, 2018

Editor’s Note: In this two part series, we will first examine what it is that your customers are looking for when it comes to risk management solutions. In Part II, we will look at what it takes to assume the role of an outsourced risk manager.

A few years ago, I had the opportunity to speak in a conference setting to 100 or so CFOs in the Philadelphia area.  While I was asked to present on the state of the property & casualty industry, I took the liberty of asking each participant to complete the following five-question survey.  The responses to the survey took me by surprise and made me rethink who I am and what I must accomplish in the industry.

Goodbye Agent Survey

What do the results tell you? Are the results good news or bad news?  And most importantly, do you see an opportunity?

Through the Eyes of the Customer

As you continue your journey in the business of insurance and risk management, it is vital that you see through the eyes of the customer.  This includes business leaders and heads of household.  As you know, these individuals are juggling responsibilities as never before.  And there’s one responsibility that needs extra focus — risk.

So, what is risk and why is it so important that you reevaluate your priorities to help the consumer identify, prioritize, measure, and manage it?   Risk is defined as “situations that involve exposure to danger.” Synonyms include endanger, imperil, and jeopardize.  As the above survey indicates, a typical CFO (the insurance and risk management consumer) does not have the time or technical expertise to properly identify exposures to loss.  While the CFO is well-equipped to manage finance and related areas, research indicates that he or she is not equipped to effectively manage risk.  A 2006 Los Angeles Times article stated that fewer than 20% of CEOs believed that their CFO was doing a good job in managing risk.  And the above survey substantiates the fact that the well-intentioned CFO admits that he or she does not exude confidence, expertise, or comfort in this role.

The challenges and time constraints of the CFO create a wealth of opportunities for you. Today’s multi-tasked CFO is starving for an insurance agent or broker who has the desire to go beyond insurance to become their organization’s outsourced risk manager.  The CFO:

  1. Wants you to take the time to understand his or her business and industry
  2. Desperately needs help in identifying, prioritizing, measuring, and mitigating risks
  3. Covets a professional advisor who delivers a systematic process including risk mitigation strategies that impact the bottom line of the organization
  4. Detests the traditional insurance bidding process.  The CFO is looking for a more strategic and disciplined approach to insurance and risk management. Simply put, the CFO does not want to be sold insurance.

Today’s decision-maker is eager for you to “think outside the box”…to demonstrate a curiosity and desire to understand the inner workings of his or her business. In other words, the CFO is searching for a new brand of insurance agent or broker – one who is consultative, diagnostic, results-oriented, and focused on managing and mitigating risks rather than selling insurance.

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

 

 

Agency Differentiation: 6 Steps to Separate You from Your Competitors

December 9, 2018

Being different is easier said than done; it takes strong strategic thinking to develop a differentiated value proposition. Let’s look at 6 steps to differentiating your agency from you competitors and what it means to your success.

Six Essential Steps to Differentiation

There are six essential steps to differentiate your agency from your competitors.

  1. Listen to the customer. This tactic has been neglected by generations of well-intentioned professionals. A pleasurable and memorable experience occurs when the customer has the opportunity to speak about his or her dreams, goals, passions and aspirations.
  2. Exploit the differences of your services and resources from your competitors. You must be able to highlight these differences. If not, you are in the crowd.
  3. Demonstrate the value of your offerings so the consumer can feel the impact on their key indicators.
  4. Include creativity and passion in building customer solutions.
  5. Demonstrate your personal commitment to ensure that the consumer achieves the outcomes proposed.
  6. Shoot for your customers’ hearts. Engagement and loyalty requires an emotional connection.

Lifetime Value of the Customer Relationship

In marketing terms, the lifetime value of a customer represents the net present value of the cash flows attributed to the relationship.

It is short-sighted to view the value of the relationship in terms of the revenue derived from the initial engagement. Rather, the following must be considered:

  • Repeat purchases over the lifetime of the relationship
  • Cross-purchasing of additional products and services
  • Price premium due to the appreciation for the experience
  • Positive word-of-mouth in terms of referrals
  • Appreciation and enjoyment when interacting with staff

Many organizations use acquisitions, marketing campaigns, and sales blitzes to improve performance.  While these strategies may give the firm a short-term boost, they are not long-term solutions.  Customer engagement and loyalty is the most solid plan.  Real growth occurs because there is a “love affair” between an organization and its customers.  And the customer can’t wait to sing the firm’s praises to friends and colleagues.

Distinguished Value Proposition

As mentioned earlier, a differentiated value proposition is essential. Your firm’s value proposition is the reason for your professional existence.  It describes how you create value for others.  It makes you stand out in a crowded marketplace.  Without a compelling value proposition, you are ordinary and disposable — a commodity.  With a distinguished value proposition, you are unique and indispensable.

Your agency’s unique value proposition statement must summarize the reason why a potential customer should buy your particular product or service, how it exceeds your competition, and why it is worthy of the price they must pay. The ideal value proposition is concise and appeals to the customers’ strongest decision-making drivers. It is an irresistible offer, and invitation that is so compelling and attractive that the customer would be out of his or her mind to refuse your offer.

Customer Loyalty

It is also essential that you develop, define, measure, and manage customer loyalty. It is not enough to understand your retention and organic growth rates.  You must dig deeper to understand why customers return, why they defect, why they buy, and what they say about you and your team.

Loyalty is commonly defined as faithfulness or devotion.  Richard L. Oliver, the renowned consumer scientist and Vanderbilt University professor referred to customer loyalty as “a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future despite situational influences and marketing efforts having the potential to cause switching behavior.”  The loyalty effect is created when the consumer becomes an advocate and evangelist of a product or service.  The impact of customer loyalty includes, but is not limited to, repeat purchases, brand loyalty, and positive word-of-mouth.

Loyalty is the key to profitable growth.  Fred Reichheld, Director Emeritus at Bain & Company and bestselling author of The Loyalty Effect (1996), Loyalty Rules (2001) and The Ultimate Question (2006), has documented research that evidences a 25 to 100 percent increase in profits from just a 5 percent increase in customer retention.  Companies with the highest customer loyalty typically grow at more than double the rate of their competitors.

Customer loyalty is not a choice any longer.  It is the only way to build a sustainable competitive advantage.  Easy?  No way.  It requires a dedication to, and focus on, the delivery of a customer experience that transcends price and product.  At the core is an experience with the customer that is so tight that it wards off competition and entices word-of-mouth referrals.

Logic or Emotion?

Is the consumer’s purchasing decision based on logic or emotion?  What do you think?

So what is logic?  It is reason supported by facts.  What is emotion?  It is the feeling that leads us to act and react.  Emotion describes the intensity of how our body and mind will respond to an event.  Emotions drive us toward pleasure or away from perceived danger.  Perhaps, emotions are best described as signals from the subconscious that steers the decision-making process.  This is especially true when logic sees all choices as equal.

The single motivator in purchasing decisions is not data or facts.  It is emotional response.  People buy when they feel comfortable, when they feel they can trust you and your firm, and when your process feels natural and reassuring.  In simplistic terms, people rationalize purchasing decisions based on facts, but they make decisions based on feelings.

It is always the heart that is touched first.  So, what does this mean to your agency?  Although you may take great pride in the “features and benefits” of your offerings, it is imperative that you assess the degree to which you are able to stimulate the emotions for those whom you serve.  In order to accomplish this, you must deeply engage your customer’s emotions in addition to, and even above, their intellect.  The simplest strategy is to find out what keeps your customer up at night as well as what drives them.  It is your discovery of their goals, passions, and struggles that opens the door for an intense and lasting relationship – an emotional connection which transcends price and product.

Dare to be different? You bet. The payoff will be huge!

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

Dare to be Different… Your Quest to Enhance Your Customer Experience Journey

December 6, 2018

In today’s dog-eat-dog business environment, it is essential that you develop a strategy to stand out in a crowded marketplace—to separate yourselves from your competition. Simply put, to be different!

Theodore Levitt, the renowned economist, professor at Harvard Business School and editor of the Harvard Business Review, had the following to say in his 1991 book, Thinking About Management:  “Differentiation is one of the most important strategic and tactical activities in which individuals and companies must constantly engage. It is not discretionary. And everything can be differentiated, even so-called commodities such as cement, copper, wheat, money, air cargo, and insurance.”

Price is the enemy of differentiation. By definition, being different is worth something. Consumers are willing to pay a premium, redefine the buyer/seller relationship, erect barriers to the seller’s competitors, and establish the seller as a trusted advisor when a differentiated platform offers perceived value in the marketplace.

Even with all of the attention paid to branding these days, more and more industries and organizations are being commoditized. In other words, fewer and fewer are able to differentiate themselves through the eyes of the customer. Commoditization will impact you and your team if you allow the focus of the consumer’s decision to be the offering rather than the quantifiable difference that you bring to their business and family.

Brand Keys, a loyalty and engagement research consultancy, analyzed 1,847 products and services in 75 categories via its Customer Loyalty Engagement Index®. It found that only 21% of all the products and services examined had any points of differentiation that were meaningful to consumers. Of interest, Brand Keys examined the insurance industry and determined that there is little to no differentiation through the eyes of the consumer. How tragic. Compare this to the automobile industry where brand differentiation is high—Volvo (safety), BMW (driving), Mercedes (prestige) and Ferrari (speed), to name a few.

So what is missing? A differentiated value proposition supported by a unique consumer experience.

The Customer Experience Journey

What is the Customer Experience Journey? It is the sum of all experiences that the customer has with you and your agency – the actions and results that make the customer feel important, understood, heard and respected. Each customer interaction molds and shapes the Journey. While you may take great pride in the “features and benefits” of your offerings, it is important that you access the degree to which you are stimulating the emotions of those whom you serve. In order to accomplish this, your agency must deeply engage your customers’ emotions in addition to, and even above, their intellect. You will hit roadblocks unless you are able to discover your customers’ goals, passions and struggles, which opens the door for an intense and lasting relationship—an emotional connection that transcends price and product.

It is essential that you realize that building a memorable customer experience involves strategy, discipline, technology, relationship management, branding, leadership and commitment – all wrapped in a process to engage, surprise and delight. Each and everyone one of the world’s most admired companies – Apple, Google, Wal-Mart, Southwest Airlines, BMW, Starbucks,  to name a few – spend countless hours on how best to deliver a unique customer experience.

Emotional Engagement

Your Customer Experience Journey will guide your customers through a range of emotions which affect their decisions including fear, greed, pride, envy, anger, pain, and guilt. In the business of insurance, compliance, employee benefits, and risk management, fear is a real motivator. Fear of losing something. Fear of lawsuits. Fear of injury. Fear of risk.

Emotional connections are essential components of the Journey. Research indicates that more than 50% of the customer experience is subconscious, or how a customer feels. The sub-conscious brain is a fertile garden in which to sow positive seeds. The mind is highly selective, processing millions of pieces of information each second. Whether you realize it or not, each member of your firm is impacting the subconscious in each step of the Customer Experience Journey.

In designing and delivering a Customer Experience Journey, you must have a plan to engage the consumer. Emotional engagement is the foundation of the customer experience. People rationalize personal decisions first but make decisions based on feelings. A great experience transcends the rational attributes of a product or service (e.g., price).

Cecil Beaton, the English Academy Award-winning fashion photographer said it best: “Be daring, be different, be impractical, be anything that will assert integrity of purpose, emotion and imaginative vision against play-it-safers, the creatures of the commonplace, the slaves of the ordinary.”

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

The Great Escape… Essential Strategies to Win the Battle Against Commoditization

December 4, 2018

Steve McQueen starred in the 1963 movie entitled The Great Escape.  This thriller is based on a true story of a mass escape from a World War II German POW camp.  The Great Escape is about courage, commitment, communication, focus, passion, positive attitude, problem solving, relationships, self-discipline and teamwork.

In 1944, the Germans built a special Stalag, or prison camp, designed to house their most troublesome inmates, the ones who repeatedly were attempting escape.  The Nazis, exasperated at the number of escapes from their prison camps, built a high security “escape proof” camp in Silesia, halfway between Berlin and Breslan – up toward the Polish border and far away from any friendly or neutral border.

There is something demoralizing about being taken a prisoner of war.  At first it stuns the mind and one is overwhelmed with a feeling of helplessness, and hope is only a dim, dim shadow.  The prisoner is sorely tempted to sit back quietly and cooperate with his captors.  But it is the duty of any officer in the time of war, should he or she have the bad fortune to be taken prisoner, to do all in his or her power to escape.  If escape is impossible it then becomes his or her duty to force the enemy to employ an inordinate number of soldiers to guard him or her.  Such was evident by the officers whom the Germans had corralled in the north compound of Stalag Luft III during the war.

Stalag Luft III was grim – six low drab wooden barrack huts in a patch of sand surrounded by a double barbed-wire fence nine feet high.  Spaced about a hundred yards apart just outside the barbed wire, the “goon boxes” stood up on their stilts about 15 feet high so that searchlights and machine guns could look down into the compound with clear vision and unrestricted field of fire.  About 30 feet inside the barbed wire ran the warning wire on little posts about 18 inches high.  It was to keep prisoners away from the fence, and it certainly did.  If you put your foot over the line, several bullets would follow.

With only their bare hands and the crudest of homemade tools, the prisoners built underground railroads, forged passports, drew maps, faked weapons and tailored German uniforms and civilian clothes.

What does The Great Escape have to do with you and your business?  Everything.  There is a disease – an enemy — that is eating away at your knowledge, wisdom and professionalism each and every day.  This disease – known as commoditization – reduces your offerings to the lowest common denominator, the competitive bid.  A stinking price!

Commoditization occurs when the focus of the consumers decision is on the offering rather than the quantifiable difference that you bring to their business.  You cannot see commoditization.  However, it can be felt in the negative impact on your confidence, reputation, time and money.

After analyzing the results of over 5,000 Beyond Insurance® Surveys and discussions with over 700 insurance agency principals, sales managers, account executives, customer service representatives and producers, Beyond Insurance has concluded that commoditization is comprised of three dangerous traps – the Commodity, Perception and Anxiety traps.

The Commodity Trap

The Commodity Trap occurs when the consumer sees little or no distinguishable difference between products, services or resources.  When this happens, price becomes the differentiator.  Getting caught in the Commodity Trap is not fun because your value proposition is reduced to a number.  It also means that you have dozens, if not hundreds, of competitors who the consumer believes delivers a similar service or product.

The Perception Trap

The lock and key for the Perception Trap is housed in the consumer’s mind.  This trap is based upon the consumer’s past experiences — their preconceived ideas of the value of your products and services.  The Perception Trap alters what the consumer sees.  When people view something with a preconceived notion, they link it with prior experiences.  Their knowledge does not allow them to open their eyes to the value of your new offering.  When concepts are viewed without understanding, the mind reaches for something that it already recognizes, a baseline of understanding for which opinions are formed.

The Anxiety Trap

Anxiety is a reaction to stress.  The Anxiety Trap represents a person’s fear of considering alternatives to the status quo.  It represents a false fear that impedes one’s ability to explore alternative means of delivering a product or service.  Moving outside your comfort zone, can cause stress which leads to anxiety.  The best way to avoid the Anxiety Trap is to play it safe.  Unfortunately, this short term strategy will leave you caught in the Commodity and Perception Traps.

If you are a member of a firm who is developing value added services to differentiate yourself from your competitors, you are escaping The Commodity Trap.  However, beware of the Perception and Anxiety Traps.  They are most dangerous and tricky.  Changing the consumer’s perception takes time and energy.  Giving a member of your staff the tools, training and confidence to avoid the Anxiety Trap can also be quite a challenge.  Be patient.  The rewards are plentiful.

Escaping the Traps

I suggest the following three strategies to escape the Commodity, Perception and Anxiety Traps:

  1. Value Proposition.  Your value proposition represents the reason why a customer should buy your particular product or service, how it exceeds that of your competition and why it is worthy of the price they must pay.  Your value proposition must appeal to your customer’s strongest decision making drivers.  A differentiated value proposition goes beyond functional product or service descriptions to express the results a customer can expect to achieve.  The value proposition must not be about you and your firm.  Rather, it must be all about the customer.  Your ability to articulate how you are uniquely qualified to help the consumer will distinguish you from others in the marketplace.
  2. Create a culture of creativity and innovation.  The ability to “think outside the box” is best supported in a flexible, open, nurturing environment.  Creativity is the act of producing new ideas, approaches or actions while innovation is the process of putting ideas into action.  Creativity is always the starting point for innovation.

Establishing a culture of creativity and innovation is essential to your Great Escape.

  1. Understand the customer.  The research of Beyond Insurance substantiates that consumers are willing to pay a premium, redefine the buyer/seller relationship, erect barriers to the seller’s competitors and establish the seller as a trusted advisor when the seller reveals to the buyer an unrecognized problem and establishes for the buyer an unanticipated solution.  Both are accomplished with a thorough understanding of the business.

The Great Escape is a story of achievement against impossible odds.  And it proves that nothing can stop a group from achieving a goal once they agree to what that goal is.  The 76 ragged, verminous men of all nationalities who climbed out of that stinking hole in the ground on that windy March 24, 1944 night challenged the Third Reich and all it stood for.  Their amazing escape allows us to understand and appreciate that anything can be accomplished with purpose, passion, positive attitude, creativity and innovation.  Go for it.  You have everything to gain – especially your freedom!

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

A Recipe for Innovation and Agency Growth – 5 Essential Ingredients

December 1, 2018

Editors Note: In our previous article, we looked at the connection between creativity, innovation and agency growth. Now, we look at what it takes to establish a culture of creativity and innovation.

Seth Godin, the internationally recognized best-selling author of Purple Cow and The Big Moo states that “The only way to grow is to be remarkable.  The only barrier to being remarkable is your ability to persuade your peers to make it happen.  You will grow as soon as you decide to become remarkable – and do something about it.”  In other words, be creative and innovative.

Establishing a culture of creativity and innovation is not easy.  It requires a management process comprised of specific tools, resources, rules and discipline.  Think of innovation in terms of planting seeds for a vegetable garden or flower bed.  The right combination of soil, water, sunshine and air will determine how well the plants grow.  For innovations to thrive, the conditions must be right.

Research indicates that there are five essential ingredients to the recipe for innovation – leadership, acceptance of failure, openness, patience and motivation.

Leadership

The innovative leader is a fearless visionary committed to backing bold ideas.  He or she is keenly aware of the benefits of an environment where people feel comfortable and confident in voicing opinions about the firm’s business model.  The innovative leader also understands the implications of rewarding creative thinkers.

The innovative leader encourages questioning, risk taking, openness and a healthy attitude toward failure.  He or she encourages the staff to challenge the status quo through questions such as, Is there a better way?  What if we…?  What would be impact if…?  How would the customer react to…?

Many organizations – especially larger ones – have hierarchical structures which impede idea creation.  The innovative leader recognizes this and responds accordingly.  Innovation cannot flourish unless the barriers to creativity are removed in order to foster a culture of collaboration and free flow of ideas.

Acceptance of Failure

Even the most beautiful garden has weeds.  Innovative organizations must not only water and fertilize, but also kill off ideas that hold no potential for future growth.  The acceptance of failure is a necessary step in the process of innovation.  The willingness of a senior management team to be open and tolerant of failure encourages people to explore new ideas, take risks and be up front about problems.

It goes without saying that failure can impact the bottom line of an organization.  It is for this reason that a “check and balance” system is required to spot potential problems so necessary alterations can be made.  Open discussion and dialog is the best remedy to avoid costly failures.  In innovative cultures, employees are encouraged to expose their ideas for early feedback and collaboration.  If a creative idea does not appear to have merit, alternative strategies should be explored in a patient setting before the idea is put to rest.

Openness

Fed Ex has a corporate wide initiative that it calls “purple promise” – each employee’s commitment to making the Fed Ex experience remarkable.  This shared mission encourages everyone at Fed Ex – from employees sorting and delivering packages to those answering phones, maintaining planes and developing new IT systems – to suggest ideas each and every day.

While innovative breakthroughs sometimes come from a single source, the vast majority of innovations draw on many contributors.  Open source innovation – the ability for a person to tap into the ingenuity of others – offers enormous potential for creative output.

Creativity flourishes in a vibrant culture that encourages people to imagine, think about possibilities and have the freedom to innovate.  Positive cultures have open channels of communication that encourage people to bring forward new ideas so they may be captured, vetted and prioritized.  These channels include, but are not limited to, casual brain storming sessions, strategic planning sessions, suggestion boxes and online tools.

Patience

The age old adage “patience is a virtue” applies to the process of creative innovations.  Patience is required if innovation is to thrive.

In The Big Moo, Seth Godin states “There isn’t a logical, proven, step by step formula you can follow.  Instead, there’s a chaotic path through the woods, a path that includes side routes encompassing customer service, unconventional dedication, unparalleled leadership, and daring to dream.”  In some cases, innovations take time because corporate infrastructure must be tweaked.  History taught us that the automobile was a plaything until highway systems were built.  The telephone system didn’t work until millions of miles of wires were strung.  Innovative leaders demonstrate patience to let creative ideas ripen.  “The Purple Cow is not a cheap short cut.  It is, however, your best (perhaps only) strategy for growth,” states Godin.

Motivation

Creative ideas come in spades when people are motivated.  An uninspired employee is not likely to wrap his or her arms around a problem.  On the other hand, a motivated person can’t wait to find a solution to a challenging issue.

The keys to motivation include intellectual challenge, independence and proper matching with a challenge.  When an employee feels that work is meaningful, he or she will explore, design and build.  3M used the practice of letting researchers spend a significant percentage of their time on projects of their own choosing.  Google mastered a similar formula.  3M and Google noticed enhanced motivation when the employee was given ownership of a project that was appropriate and intellectually challenging.

The recipe to create an innovation culture – leadership, acceptance of failure, openness, patience and motivation.  This combination will create the one, two punch to knock out your competition.

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.

Creativity as a Starting Point for Innovation

November 28, 2018

From the quiet analytical physician to the superstar professional athlete to the composed musician, self-confident people have qualities everyone admires.

On December 17, 1903, a man walked into a restaurant in Norfolk, Virginia to announce that “there are two loony Yankees down at Kitty Hawk trying to learn to fly.”  Little did this man realize that these curious pair of innovators would achieve the first powered, sustained and controlled flight of an airplane.  Orville and Wilbur Wright would survive this flight and many others.

The credit card was introduced in the 1920’s for automobile owners to make the purchase of gasoline easy and efficient.  As company’s like American Express and Diners Club made it possible to purchase meals, lodging and merchandise with the swipe of plastic, the concept of the credit card took off.

In 1968, a scientist named Spencer Silver was researching ways to make 3M’s adhesive tape stronger.  He failed to meet his objective yet discovered something new – an adhesive strong enough to stick on many surfaces but could easily be removed and reused.  In 1977, Post-It-Notes hit the market.  The concept did not catch on immediately as consumers could not imagine why they would need such a product.  It was not until 3M decided to distribute free samples that people understood and appreciated the versatility of the little sticky notes.  Once this happened, the consumers’ imagination ran wild.

What do the Wright Brothers, the credit card and Post-It-Notes have in common?  Creativity leading to innovation.

Creativity is the act of producing new ideas, approaches or actions while innovation is the process of putting an idea into action.  Creativity is always the starting point for innovation.

People who have a gift for creative innovations tend to differ from others in three ways:

  1. Specialized technical knowledge in a particular discipline.
  2. Creative thinking skills. Flexibility and imagination as they relate to problem solving.
  3. Intrinsic motivation.

The ability to “think outside the box” is best supported in a flexible, open, nurturing environment with a leader who sees his or her primary role as supporting rather than directing.  Creative people require this kind of environment to invent, imagine, problem solve and create fresh ideas and concepts.  Creative ideas emerge when preconceived assumptions are discarded and attempts at new methods, which seem odd or unthinkable to others, are explored.

Commoditization is a huge issue for the insurance and risk management profession.  It is evidence by ferocious price competition, leading to lower prices, margins and profits for agents, brokers and carriers.  Unless an agent, broker or carrier offers something unique or differentiated, price will win every time.  In today’s fast paced, turbulent marketplace, it is critical that industry leaders understand the importance of creating a culture that fosters imagination, originality, diversity of perspectives and fresh ideas.

Innovation is the successful introduction of a new thing or method or a new way to look at an “old” thing.  It involves acting on creative ideas to make a specific and tangible difference in the domain in which the innovation occurs.  While creativity implies coming up with new ideas, innovation is bringing these ideas to life.

Innovation is the life blood to a successful business.  Without it, there is stagnation.  With it, there is energy, excitement, differentiation, value creation, passion and purpose.  Innovation is a dynamic process of continually considering alternative means of delivering products and services, improving customer experiences and opening new markets.  Innovation is the single most essential element to aggressive top line growth and bottom line results.  Organic growth, profitability and agency value are dependent upon innovation.

Editors Note: Understanding the importance of creativity and innovation is just the first step to agency growth. Check out our article on the recipe for innovation – five essential ingredients.

About the Author

Scott Addis, CPCU, CRA, CBWA is the CEO of Beyond Insurance and is recognized as an industry leader having been named a Philadelphia finalist for Inc. Magazine’s “Entrepreneur of the Year” award as well as one of the “25 Most Innovative Agents in America.” Beyond Insurance is a consulting firm that offers leadership training, cultural transformation, and talent and tactical development for enlightened professionals who are looking to take their practice to the next level.  Since 2007, the proven and repeatable processes of Beyond Insurance have transformed individuals and organizations as measured by enhanced organic growth, productivity, profitability, and value in the marketplace.