Tag Archives: insurance

Is Hartford in a Freefall to Nowhere?

Believe it or not, it is easier for a company to achieve remarkable levels of success than it is to stop the slide down once a company reaches the pinnacle of its success. There is no in-between. Once a company stops growing, it begins to decline. It may take months, years or even decades, but in the vast majority of cases, once the decline of a successful company begins it is virtually impossible to stop before the company loses its independence or actually fails and disappears. The lesson is simple: If a company is not making history, you are history. If you don’t grow, you go!

There are almost too many examples to prove the point, but Xerox, Kodak, Polaroid, Trans World Airlines, General Motors and Chrysler are but a few that can be mentioned. Even if the companies have survived, they are clearly in a form different from their heyday of success. Consistent patterns – some obvious and some subtle – plague all companies that begin the downward slide to failure. For a successful company to avoid the slippery slide to oblivion the leaders of the company must understand, resist and overcome these signs of slide.

These identifiable patterns include:

  • The company begins to lose its competitive edge. Market and technology changes become the enemy rather than the opportunity.
  • The culture of the organization evolves from entrepreneurial to bureaucratic.
  • Company management begins to exhibit an attitude of entitlement to future success for the company.
  • The company seeks to maintain rather than attain.
  • As the future becomes uncertain, management wraps itself in the certainty of the past.

Once these patterns have taken hold and a company begins to decline, it is virtually impossible for the management that allowed the decline to begin to reverse the slide into oblivion. It becomes, as they say, inexorable.

A company in decline can easily be identified by the actions of a flailing management in an attempt to save the company. Actions such as:

  • Reorganization after restructuring after reorganization. It is as if simply moving the pieces around will change the game.
  • Cost-cutting and downsizing ad nausea. Cost-cutting and downsizing were not what caused the company to grow in the past, but a desperate management acts as if such actions are the Yellow Brick Road to future growth.
  • Switching from taking known risks to making gambles on unknowns. Gamblers always lose in the end, but managed risks are opportunities for growth.
  • Seeking to change the rules of the game to make it easier for the company to compete, i.e. changes in accounting or regulatory rules.
  • Attempting to sell off parts of the company to save the whole. When a company is in growth mode it adds to the whole. When a company is in decline it subtracts from the whole.
  • An attempt to find a “strategic partner” to prop up the company as it teeters on the brink of failure.

There are three telltale signs of a company in decline:

  • Constant, pleating protestations from management that, “everything is okay and under control.”
  • When there is wave after wave of changes in the executive suite, especially the CFO and CEO.
  • When second level management and key employees begin to desert the company.

Any number of companies could be the poster child for the ersewhile successful company that barreled down the road to potential oblivion, but none more contemporary or pertinent than Hartford Financial Group. (Even though AIG and Lehman Brothers are obvious examples of successful companies that failed, their demise was more the result of greed and search for artificial growth.)

Continue reading

Who Wants the Same Old, Same Old? Pray for Change!

There are times when change is more than just “change.”  Times when change is not simply an evolution of what has gone before, but instead is the  emergence of a fundamental shift to a new understanding or attitude. This is not the kind of change that simply makes things better or different – but rather the creation of a strikingly new reality. And it can happen whether we recognize it or not.

When that kind of transformation occurs, thinking and operating under the laws of the old order not only does not work, it actually hinders the ability to quickly and effectivelhy respond to change. Maintaining a “business as usual” mindset assures failure when “the underlying basics” have changed. As a new paradigm replaces the old, the slow to adapt tend to complain, while the nimble will have cause to celebrate.

That’s because there is always a bright side to change. Change is the fuel for new opportunity. From stone to iron, iron to steel, barter to cash, and agrarian to industrial – our success, or inevitable demise, depends not only on our ability to recognize change, but also in our willingness to adapt to change.

Most institutions fear change because it can challenge the very principles upon which they were founded. Rather than dread change, institutions should seek it out as an opportunity to justify their continued existence and stature. In the same way, most individuals fear change because it creates uncertainty, and uncertainly suggests a loss of control. But individuals, just like institutions, should pray for change since in gives them both the opportunity to stand out from the pack and take an active role in shaping a new future.

This is not just pie-in-the-sky theory

In 1987, the life insurance industry was riding the crest of success and apparent invincibility. The big companies were getting bigger and more dominant and enjoying the ride. The success of the big companies seemed to insulate them from competition, both from within and outside the industry. The status quo reigned as the preeminent business plan. The leaders of the life insurance industry were so comfortable with the business environment in which they operated that they simply sought more of the same as the pathway to continued success.  Continue reading

Gander Institute to Release Findings on Future of Life Insurance Industry

The life insurance industry is beset with issues, problems, poor management actions and challenges that have set the industry adrift in a downward spiral without a clear strategic vision of what needs to be done to assure a relevant future. I have addressed these issues in past blogs; the most recent being on the 151A EIA annuity fiasco. My objective has been to stimulate debate and discussion, with the hope that leaders will emerge to solve these problems. At the same time, I received a number of comments suggesting, “If you know so much, just what would you do about these problems?”

That’s a fair question. Unfortunately, having been away from active participation in the industry for several years now, I do not have the current knowledge or expertise to properly offer a solution. (This proves the point that it is always easier to criticize than to correct.) However, I have been given access to a draft of a recently completed comprehensive study on the future of the life insurance industry. This study was funded by the internationally renowned Gander Institute of Gander, Newfoundland. The Gander Institute is a think-tank that was formed early this decade to address international commercial issues.* To conduct the study of the insurance industry, the Institute brought together in Geneva some of the world’s most prominent insurance thinkers and innovators, so naturally it was a small group.

The report is still confidential and won’t be released until June 7, which is International Insurance Day, but I can offer some highlights based on a reading of the report’s preliminary findings.

Continue reading