HELLO, DOLLY: MOVING BEYOND OLD PARADIGMS
by Michael Manes
The announcement of the cloning of a sheep several years ago created quite a controversy. The possibility of cloning people creates the potential for an emotional argument.
If we could drop our emotional reaction for a few minutes and review this cloning issue rationally, we'd probably come to the conclusion that there is no one person that the marketplace might want to duplicate exactly. With all due respect to Mother Theresa, Billy Graham, Michael Jordan, Elvis, etc., we'd surely be better served by taking only the best traits of these great people than recreating exact duplicates.
The Barnett decision recently ended or at least quieted another great debate-the future of banks and insurance. The new reality is that banks will sell insurance products just as insurance companies now sell bank products. Rather than spend additional time debating the rights and wrongs of an issue that has been decided, let's determine the best way to move into the new reality.
The first reaction to this decision has been a furor of activity-a rush to clone an agency inside a bank. The reality is this: Traditional banks and traditional agents are both endangered species. Mating or cloning them will not create a healthy hybrid. Our best hope for success is our ability to genetically engineer-capture the best traits of-both systems before we mate them. This will greatly enhance our results.
Banks provide structure, facilities, and systems. This is good but not the most important asset of a bank. Banks have trust and traffic-they possess credible relationships with large numbers of people. Agents need people and businesses to sell to.
Agents bring their knowledge of people and their needs. They possess a commitment to action-an ability to make things happen. Their independence, their willingness and ability to survive and prosper despite all odds and adversity, is their greatest asset. Banks need these strengths to compete in this new world of financial services. They need the street smarts of agents.
The reality of the Barnett decision is that it creates significant opportunities for agents. But it's not as simple as cloning past successes. Success will require 'genetically engineering' the products, processes, and methods of delivery and mandates a reduction or elimination of the weaknesses in each system to build on the strengths.
The future is not about blending the agency and bank cultures or allowing one culture to dominate the other. It's about creating a new organization for a new world by identifying niches, individual customers, and their needs. It's about designing products and delivery systems to satisfy and exceed the expectations of each customer.
History provides the starting point for our discussions and redesign. Since the Great Depression, banks have been highly regulated. Regulation of solvency, operations, and products created sameness in the world of banking. It resulted in a system devoid of competition.
Because of this lack of competition, bankers and banking operated in a seller's market. The customer searches out the bank and begs, 'Please, please, please lend me the money.' But agents live in a buyer's market. Their constant plea is 'Please, please, please buy my policy.' These environments are diametrically opposed to one another and this creates the basis for the difference in values/culture, focus, compensation systems, processes, etc. The future will be a buyer's market.
Regulation and the resulting sameness in the banking industry created an institutional focus rather than an individual focus. Systems evolved into bureaucracies. Rules and roles replaced individualism and creativity. Adherence to the rules and attendance to the task became the basis for rewards and promotions. Achievement, creativity and performance-driving forces in the sales world of the agency system-were not recognized and often were discouraged.
Regulation must be recognized and but can no longer be used as an excuse for average performance. Agents must respect regulation and adhere to the rules established-while at the same time, tomorrow's world must challenge participants and reward performance. Compensation systems must change and this will be one of the most difficult challenges.
Traditionally banks have focused on products and process first and people last in a mass-marketed system. Agents, on the other hand, have primarily been interested in people and products first, with process as an afterthought. Agents have been niche marketers-mass marketing to smaller groups. In the future, the focus must be driven by the individual customer (a niche of one) and a seamless system of products and processes that meets the need of these customers. This will require that both agents and banks redesign products and process.
The stoic, traditional, institutionalized version of Financial Services-both insurance company and bank driven-will implode in favor of a new world of marketing organizations that deliver whatever's needed to meet the financial service, planning, and risk and change management needs of individual customers. Marketing will be defined simply as profitably satisfying customer/prospect needs.
Caveat emptor - 'Let the buyer beware' - is wisdom for all ages. As banks and agents try to work together, it will be most important. Banks must be aware and prepared for the sense of perceived chaos that will accompany an agent acquisition, alliance, or merger. 'Those insurance people' will be a lot different from bankers-a little loose, aggressive, and not very precise. Very quickly into these new 'marriages,' agents will discover that their mate is stoic, risk averse, slow to decide, and quick to say 'no.' The harder agents sell their ideas for this new venture, the more the bankers will back up.
Success will not result from focusing on the way we used to do things. Success will belong to those who commit to the task of managing change and creating a marketing culture. These organizations will focus with laser intensity on identifying and defining customers, determining their wants and needs, pricing to the marketplace and innovating process to ensure profitable delivery.
Success will require a new vision, mission, systems, and (most important) culture. To understand the challenge of creating this new culture complete one simple task: Squeeze the toothpaste out of the tube, and then put it back. The bad news is that this messy task will be easy compared to the challenge of mating the dinosaurs of traditional banking and agencies. The good news-the great news-is that the rewards are incredible.
Michael G. Manes can be reached at Square One Consulting, 625 Weeks Street New Iberia, LA 70560,, 337-577-3885 (Cell), e-mail [email protected], or visit www.squareoneconsulting.com.