13. The Co-operators—Using Business Practices to Clarify Expectations
Chapter Contents
How Tangible Culture Has Helped
Overview
This chapter shows how the concept of Business Practices can supplement other information, such as principles, and help clarify the details of a transformational vision. It also shows how the concepts of Right vs. Right and Outcome Narratives can be used informally as questions to guide deeper and more structured discussions.
Introduction
Companies transform for a variety of reasons. In the following case, you will see an organization respond to a new enterprise mission, vision, and associated business model enabled by Client Relationship Management (CRM). As with any enterprise or project vision, the early stages are pivotal—key decisions need to be made and tradeoffs reconciled. Companies often make the mistake of pushing quickly through this important stage, assuming agreement and full understanding.
This story shows how the team used the Tangible Culture concepts to clarify expectations during visioning. It also reinforces the view stated in Chapter 11, “Major Transformation—Addressing Your Plan’s Hidden Barrier,” that mindset shifts (called “business philosophy” here) are at the core of transformation.
The Company
The Co-operators Group Limited (www.cooperators.ca) is a group of Canadian companies offering insurance and financial services based in Guelph, Ontario. They consist of 31 similarly structured organizations known as member-owners, and together represent a combined membership of 4.5 million Canadians and assets in excess of $6 billion.
The Co-operators products and services include auto, home, farm, commercial, travel, life, and group insurance, as well as wealth management, investment, and real estate management services. They have more than 4,200 staff, more than 430 exclusive agents, and approximately 900 independent brokers distributing products and services through 650 outlets and three call centres.
The Co-operators began during a period of adversity following the depression and World War II. Canadian rural communities were threatened by lack of capital, and when insurance policies were cancelled for nonpayment, families who lost their breadwinners were reduced to poverty. In March 1945, The Co-operators was formed and began by training 16 men to sell life insurance.
Today, The Co-operators is one of Canada’s Top 50 Best Employers (for both 2004 and 2005) according to The Globe and Mail’s Report on Business. Dennis Deters, Senior Vice President of Member and Corporate Relations and Planning, stated in 2004, “Canadian cooperative pioneers have, through our ownership and management, worked hard to create a culture throughout The Co-operators group of companies that reflects the traditional cooperative values of caring and sharing.” (Insurance-Canada.ca). Clearly, molding a cooperative, client culture has been an ongoing priority at The Co-operators.
In March 2002, Kathy Bardswick was named the fourth president and CEO, and she affirmed the recently adopted mission and vision:
Mission: “Financial security for Canadians and their communities.”
Vision: “We will be the Canadian champion; where Canadians are, with the financial security products and services they need, when they need them, however they wish to buy them; a member of, and contributor to, a strong co-operative community.”
CRM could help The Co-operators know more about their clients—through a 360-degree view—and thus serve them better. Specifically, CRM could help The Co-operators respond flexibly to client preferences and their individual needs for financial security—in net, more value, less time, and less complexity for clients. For these reasons, CRM was identified as the vehicle for propelling their mission and vision.
“If we want to truly deliver on our mission of providing ‘financial security,’ we will only be able to do so by recognizing what security means to our clients, not what we think it means,” said Kathy Bardswick. “That in turn is only possible when we intimately understand and anticipate their needs and expectations; a tall order and one that requires us to change what we do and how we do it. Our CRM initiatives are driving this fundamental and widespread change. Let me clarify that CRM is not a project—it is a long-term item on our ‘to do’ list, and is driven by our never-ending priority to put our clients first. That focus will become our way of life.”
CRM at the Co-operators
For many companies, CRM means a systems implementation. For The Co-operators, it is a client-centric business philosophy. The CRM goals are to realign the organizational structure, business rules, and processes around a client focus, then enable them with technology. The CRM vision reinforces the philosophy of relationships:
We will have a set of processes and technology that will enable agencies and employees to establish, retain, and enhance mutually beneficial client relationships. Our ongoing strategy will allow us to deliver superior financial solutions by knowing our clients, responding to their needs and preferences, and recognizing their long-term value.
“Our CRM program was designed to benefit all stakeholders,” said Dan Watchorn, the Vice President of CRM. “First it benefits the clients by ensuring the organization knows who they are, recognizes their value and is able to respond to their needs and preferences. It also benefits our agents by differentiating us in the marketplace, thereby enhancing their ability to increase their revenue. And finally, it benefits the organization by ensuring we target our growth to the right clients, increasing efficiency and bottom-line profitability. This win-win-win scenario is key to helping everyone understand ‘Why CRM?’ and justifies the investment of time, effort, and money.”
CRM began in mid 2003, and Release I began rollout in February 2006. It is impacting nearly 4,000 people—2,000 Co-operators employees and approximately 2,000 independent agents and their staff. Release I will
Provide new processes for taking claim reports, generating leads, recording client contacts, and handling incoming client requests.
Specify business rules to standardize service quality, levels, and differentiation.
Implement a central client information database.
Implement a desktop client information tool to enable a full listing of each client’s products and contact history.
Enable the changes through organizational and transition strategies.
This release is the foundation for their CRM transformation. It will allow everyone within The Co-operators to have a full understanding of the client and their value to the organization when dealing with that client. To be ready for it, the team has
Defined a CRM value proposition, including the definition of and vision for CRM, and an articulation of key business value drivers.
Developed a CRM blueprint and roadmap, including an end-state business model, prioritized initiatives to achieve CRM capabilities, and a business case based on a staged transformation roadmap.
Established a project infrastructure to support roadmap implementation.
Specified and integrated the overall designs for CRM.
Beyond Release I, The Co-operators CRM project will entail
Standardizing sales and marketing business processes.
Creating additional business rules relevant to the new processes.
Implementing a contact centre to augment the agent channel for sales and service.
Implementing sales, marketing and campaign management tools using CRM software.
Deploying all changes to the rest of the organization.
Figure 13-1 shows some of the complexities of the work. The diagram shows the key CRM components and their relationships to each other and the release schedule.
Figure 13-1. Logical diagram of CRM components.
The overall CRM program is targeted at improving client satisfaction and loyalty, quality of services, and productivity. The metrics include growth in target client acquisition, improved loss ratio, and growth in agency and contact centre sales.
“The executive leadership team at The Co-operators recognize and fully embrace the commitment to process, change management, and organizational alignment required to successfully enable their people to achieve the business benefits detailed by their CRM vision,” said Philip Grosch, IBM’s BCS Partner. “Their integrated approach is driving business acceptance and a clear focus on results.”
The CRM Culture Challenge
CRM is a new way of doing business for The Co-operators, and they quickly recognized the need to think differently about their business. This meant that senior management needed to support CRM as a top priority, and that the organization and accountabilities needed to be redesigned to align with the new direction.
After senior management was committed to CRM and had begun aligning the needed elements, attention was focused on the independent agents and those who supported them. Let’s look at the progressive steps the team used to clarify the CRM vision.
Stakeholder Strategies
One of the first activities was to identify stakeholders, analyze their impacts, and develop strategies for managing the change implications. The team recognized that broad and deep involvement was needed. How else could they change the business philosophy? And how could the organization convincingly communicate a new focus on client relationships without focusing on internal relationships first?
The stakeholder strategies included the following:
Regular meetings to communicate the CRM vision and its details
One-on-one meetings with key people to discuss and address needs and concerns
Involvement from each stakeholder group in creating and evaluating the designs
Opportunities for feedback on the vision
With the stakeholder strategies underway, work began to clarify the operational vision and help key groups develop ownership of it. From here, we concentrate on two of the stakeholder groups: independent agents and field management. The independent agents are responsible for sales and service activities for insurance clients. Field management is a corporate group that supports the independent agents through coaching and development; performance tracking; and guidance, advice, and consultation on developing their businesses.
CRM Key Focus Areas
Some high-level decisions were made early on. These decisions became key elements of the vision as it unfolded:
Shift from a product-centric to a client-focused business model.
Shift from a service orientation to a relationship orientation.
Extend support channels to help with overflow and expand hours of operation.
Focus tools and data on knowing clients better and responding more effectively.
You may recognize Right vs. Right in the first two. Certainly product-centric, services orientations are “right” answers, but not here. The communications specifically stated a shift from the product-centric, services orientation to the client-focused, relationship orientation. Although it may sound obvious, many companies forget the power of communicating what they do not want to do. The Co-operators made this shift clear.
Operating Principles
Next, field management envisioned the desired agents of the future. After they had a vision, they would share it with the agents to gauge reactions and gain input. They started by agreeing to the vision’s key operating principles:
Agents need to have a clear contract with The Co-operators.
Agents have a responsibility to the organization, their clients, and the profession.
An agency is running and building a business within a business.
Business profiles include income producers and business builders.
This last principle was a core distinction. Historically, both income producer and business builder profiles were valid. But, were both consistent with their future vision? Here’s where Business Practices could help by distinguishing what each profile meant.
Business Practices
For income producer and business builder profiles, high-level Business Practices were identified across an array of CRM business dimensions. Table 13-1 shows excerpts.
Table 13-1. Business Practices for Profiles
A few things may jump out as you review Table 13-1. First, this is a list of Right vs. Right Business Practices. They used the contrasting Business Practices not for reconciliation but rather as a way to examine the differences between the profiles, which led to some pivotal questions. Should both profiles be acceptable as long as individuals produced results? Would the CRM vision necessitate breaking some historical success patterns? The Co-operators made a key decision: They wanted to focus on business builders because it fully embodied their client-focused, relationship orientation.
You may also notice that the values listed in the operating philosophies dimension are exactly the same for both profiles. Clarifying expectations based on values would have provided few (if any) distinguishing characteristics. However, thinking through the Business Practices surfaced a number of differences.
Going Deeper on Business Practices
Until Business Practices are defined at a level where important tradeoffs have been considered, they may be hard to put into action, so the team went deeper. For example:
“Building a business” would include concentrating activities on the highest value client segments and product profitability mix.
“Building client relationships and providing effective advice” would include educating clients on emerging risks.
“Proactively seeks a relationship with the client” would include scheduling regular client contacts to understand the client’s situation—then, secondarily and typically in a separate meeting, the focus would be on sales.
Now the team could see how priorities would be set, how decisions would be made, how client contacts would be prioritized and handled, and so forth. The team also recognized their vision would require something deeper between field management and the agents—field management needed to become trusted advisors to the agents.
With the Business Practices clarified, support requirements for the new business model were easy to identify. For instance, a client contact role would be needed to manage the proactive client contacts. This role could be a separate job or an activity incorporated into another job. Also, educating and advising clients meant that staff members would need general skills as well as expertise in one or more areas.
The decisions were documented in an Agency of the Future definition. Defining the expectations required Right vs. Right types of discussions of each view and clarifying the elements contained in the Outcome Narrative format (for instance, outcomes, roles, behaviors). In fact, the team found this detail necessary to build the needed understanding.
After the Agency of the Future was developed, communications were provided to stakeholder groups. Feedback was also collected and used to refine the vision and planning for Release I. Here are some of the stake-holders’ comments and questions:
“What will be done to help people with income producer mindsets make the shift? Over what time frame?”
“We need to stop hiring income producers. Our hiring tools are currently oriented toward sales and service.”
“The agents need training on how to build relationships. We need good question and response techniques. We also need to understand regular reviews from each client’s perspective, but set some minimum expectations.”
“We need to rethink our historic definition of business builder because it seems to be changing—and we need to allow for local and regional differences.”
“In this new environment, we need to think about who we put on a pedestal. How important are results versus implementing the actions identified in the Agency of the Future document?”
“Is the organizational definition too well defined? Shouldn’t agencies be given more options and latitude in these areas, or do we want a cookie cutter approach?”
“Do we really want entrepreneurial risk takers, or do we want people who value our partnership model and are well positioned to operate in our business model?”
“How do we communicate expectations given this will be a small change for some and a huge change for others?”
Astute comments and questions such as these during pre-rollout communications means that the project sponsors and team have sorted through many decisions at a good level of detail. In fact, this feedback process even identified some misconceptions they needed to dispel before people had taken unintended actions.
Progress To-Date
The Release I rollout just underway at this writing, and already much progress has been made on achieving the new business philosophy for The Co-operators, specifically the following:
The organization and accountabilities have been redesigned to align with this change in strategic focus.
The Agency of the Future profile has been communicated broadly, and has been embraced by field management and most employees and agents impacted.
The business areas are embracing CRM and working actively to determine how they can change their practices and prepare for a client-focused and relationship-oriented environment, even before the new tools and capabilities are implemented.
Of course, this multi-year journey has some challenges ahead. Prioritizing a capability rollout is tricky, and the project team is working to move quickly while not pushing beyond the speed the organization can absorb. This is especially important when a business philosophy is involved—people need time to understand the new ways of thinking and working. To help with the change requirements, and to build capabilities for the future, a series of disciplined change management activities, such as stakeholder management, communications, impact analysis, and benefits realization are being coordinated closely through the program management function.
Lynn Skillen, IBM’s Executive Project Manager, commented on the approach. “Shifting the emphasis in the CRM program from being technology-driven to business-driven required very pragmatic, specific activities involving the business area people earlier—and more often. This demanded some innovative approaches through program management and within many of the project initiatives.”
How Tangible Culture Has Helped
Certainly, the CRM project sponsors and team have done a tremendous job of clarifying their transformation vision, and Tangible Culture concepts have been only one small part. However, thinking through Business Practices has helped define the expectations at an actionable level, and has led to effective decisions and meaningful communications.
Perhaps the greatest benefit was the structure it brought to the process. Business Practices, Right vs. Right, and Outcome Narratives enabled the team to focus the discussions by crafting questions from each concept. In fact, before these concepts were incorporated, the discussions bounced around. The concepts enabled the team to nail things down and bring structure to difficult and broad discussions.
“Focusing on improved business practices had two major benefits,” said Rick McCombie, Senior Vice President, Direct Distribution. “It made sure the initiatives were business oriented, not technology-driven. It also provided a level of discipline to make sure we met our objective of being a more client-centric organization.”
Alasdair Campbell, Vice President, Special Lines, said, “All of the thinking and ‘answers’ were already there. This process helped us to bring structure and clarity to the discussions to develop a meaningful set of principles and practices. It really helped senior management to sort out their commitment to the direction they would like field management to take nationally.”
Conclusion
Business Practices, Right vs. Right, and Outcome Narratives are tools for helping companies clarify their expectations. Here, they were used to dig deeper into a transformation’s requirements and pose the questions necessary to clarify expectations. The concepts were combined with a principles approach, which reinforces that Tangible Culture does not take anything away—it only adds new capabilities and techniques.
IBM would like to express sincere gratitude to The Co-operators for letting us document parts of their transformation journey in this book.
References
Fanning, C. “Client Relationship Management at The Co-operators,” 2005.
Insurance-Canada.ca, www.insurance-canada.ca/humanres/canada/coop-winner-501.php, “The Co-operators Group of Companies a Triple Winner in Workplace Survey.”