I’m excited to introduce our latest blog series – this time, we’re giving a crash course on business leadership, geared toward intermediate level professionals. Imagine you were suddenly promoted from your current role to running the entire business – this series will provide a step-by-step guide and tried-and-true strategies for how to succeed and lead from the top. It also provides a great refresher for business leaders moving to a new organization or seasoned executives looking to get back to basics and direct their company toward an ambitious goal. We’ll help you understand how to run your profit and loss (P&L) center – and provide tactical steps on how you can do it successfully.
The series has been adapted from a presentation I delivered at the SOA Conference in October 2018 and is based on strategies I’ve developed over 20 years as a business leader in the insurance industry. Throughout the talk, the audience was eager to learn more, asking questions and offering lots of insightful feedback. We recognized that a lot of industry professionals are eager to learn more effective management and leadership strategies and, beyond their specialized knowledge and skills, get a sense of the principles and practices that make a business work.
The principles are flexible, providing a roadmap for leaders that applies in the insurance industry and beyond. The 7-part series will guide you through these steps:
1. Understanding the Business Model
2. Assessing the Current State
Part 1: Understanding the Business Model
This first step helps you set the foundation. It provides a look at the business from a high level before the next steps take you deeper and deeper into the specifics of how your organization runs.
Leadership starts with a basic question that forces you to get to know your business: What kind of product and/or service does your company sell?
Leaders need to be two steps ahead – but they can’t get there if they don’t lay the groundwork. Develop a rock-solid understanding of what you sell to start establishing that groundwork.
Once you have a clear answer to that question, you need to understand two things:
Your customers and their motivations.
Recognize why people seek, choose, and gain value from your product or service. What drives them to you? What do they like? You need to know who you’re speaking to and who you’re serving so can set strategies focused on delivering value to your customers.
Your competitors and your advantages.
Identify who else is operating in the space and offering a comparable product or service. What differentiates yours? Knowing this can be a source of incredible strength.
These questions may seem straightforward, but the answers are often challenging and complex. The challenge is worth it, as the answers will allow you to get an essential high-level understanding of what the business is really about at its core.
What is your business formula?
Every business I’m familiar with has a formula that exists between what they’re offering (their product or service) and the price they charge for that offering. This formula needs to strike the right balance. If you aren’t able to make money through this formula, then you won’t be able to stay in business. If you attempt to charge too high a price, you will push customers away. What you charge needs to be a price that people are willing to pay – and it also needs to allow you to operate, to pay your employees, and to offer a return to your investors.
If you don’t have a good balance in this formula, you are destined to struggle. When taking stock of your business model, if your formula isn’t set up for success, you need to fix it before you can focus on growing the company. Otherwise, you will waste time growing a business that will become less and less viable. If the formula is already properly aligned such that customers are willing to pay your price and your business is delivering a good return, you can move on to focus on how you can make your company bigger.
Fundamental knowledge of your business model will inform how to run all areas of business
This fundamental understanding is critical to run a business. Understanding the model and the root of how your organization runs is essential for success. Even if it may seem obvious at first, this important first step equips you with fundamental knowledge and a solid understanding that, as a leader, will inform how you run all areas of the business.
In Part 2: Assessing the Current State, we’ll begin shifting focus from a high-level view to a detailed view, zeroing in on the constituents that make up your business. Subscribe to our blog to discover how to effectively lead in insurance organizations using strategies developed throughout the years by RGAX business leaders.