The Chinese use two brush strokes to write the word “crisis.” One brush stroke stands for danger, the other for opportunity.
In a crisis, be aware of the danger—but recognize the opportunity.
This idea, communicated by John F. Kennedy in a speech he delivered over a half-century ago, certainly resonates now.
Executive SummaryAs carriers move past the crises of 2020 to seek opportunity, a renewed focus on purpose is in order, writes Amy Radin, a former chief innovation officer for Citi and former marketing officer for AXA who currently works as a board director and adviser to would-be innovators. Here, Radin, author of “The Change Maker’s Playbook: How to Seek, Seed and Scale Innovation in Any Company,” explains the value of purpose, offers examples of purpose-led non-insurance businesses and gives a how-to list for creating a purpose-driven carrier. Steps include adding change makers and influencers to the team, serving as leaders and role models that give followers confidence and guidance to embrace change.
Carriers experienced danger on many fronts during 2020—the pandemic, spreading wildfire outbreaks, social instability and economic fallout—translating into financial, employee, customer, distributor, and other business and stakeholder impacts across insurance lines and geographies.
We will live with the long-tail effects of 2020 for years if not decades to come. But if we are able to seek the opportunity, not simply the danger, then we can think through and commit to changes that can accelerate the ability to gain competitive advantage, expand and deepen customer relationships, and adapt with the speed that is demanded now.
Along with the lasting impacts of 2020 events, the pace of InsurTech launches, M&A and investment activity all suggest that directing efforts to recovery—to reverting to the way things were—is not a strategy. Nor is viewing the array of ever-advancing technologies as holding singular answers to ensuring a strong future.
More fundamental questions face the industry’s C-suite. The answer to one will facilitate aligning strategy, people, capital and other resources around what matters for the future of any business, in both the short and long term.
That question is, “What is your purpose?” Said differently, “How do people in your organization make a difference and derive meaning from their work?”
Why Focus on Purpose Now?
The genesis of the insurance sector is in evidence dating back 5,000 years, when shippers devised pools to protect against the loss of cargo and crew at sea. These solutions’ purpose arose out of the notion of a community contributing to a common fund from which many would not benefit monetarily for the sake of protecting the few in their hour of need. All participants were able to realize the benefits of peace of mind and the security of knowing they were protected.
Even as insurance companies have introduced new products, brands have come and gone, and other aspects of the business have changed dramatically, the creation and management of risk pools sufficiently durable to pay claims over time has for centuries been the basis for the industry. Carriers have played a critical role in our collective and individual well-being, in serving policyholders and the community at large in ways far beyond product features and functionality.
Now, signs of centuries-old assumptions being rewritten are omnipresent. Innovations such as usage-based products and technologies enabling wide and affordable access to genetic testing have the potential to disrupt—if they are not already undermining—the effectiveness of traditional risk pooling, affecting both carriers and their policyholders.
What is the value of clarifying a brand’s purpose now? Evidence suggests that purpose-led companies are far better equipped than those that lack purpose to operate in an environment of continued change, unpredictability, uncertainty and ambiguity. This makes sense, considering that purpose-led organizations have articulated a future state, and their people are able to direct all of the business’ resources, with focus, toward achieving a universally understood vision of the future.
- Always know where they are heading.
- Use their defined purpose to guide them through uncertainties.
- Sustain a workforce that brings their best selves to the organization.
- Increase their ability to overcome challenges and achieve results.
What Is the Path for a Leader to Create a Purpose-Driven Organization?
This is a serious and valuable work effort. Here is a topline summary list of how to pursue the path toward an authentic, impactful purpose:
- Believe it is possible to inspire a purpose-led workforce and buy into the essential requirement for authenticity. Employees will quickly recognize and respond with cynicism to purpose-as-slogan. Millennials, in particular, are demonstrating far greater commitment than their parents to affiliate with purpose-led brands when choosing employers and from whom to buy products and services.
- Sponsor and empower a diverse team to lead a collaborative, iterative and disciplined process that engages members of the organization to define the business’ purpose. Maintain priority and sponsorship at the CEO level. This is not a project to be handed off to HR, Corporate Social Responsibility, Marketing or any other silo.
- Commit to constant communication. The movement to being purpose-led will have far-reaching impacts. As in any transformation effort, a dialog with employees to reinforce your continued engagement and listen actively to what they have to say really matters.
- Know that the organization must, to paraphrase the late author, futurist and businessman Alvin Toffler, “Learn, Unlearn and Relearn” through ongoing reskilling, acquisition of new knowledge, and an ability to abandon old knowledge whose value is not only outdated but may actually be a roadblock to moving forward.
- Avoid a top-down approach. The traditional, hierarchical chain of command will slow down progress, as it does with many of today’s business requirements. Directly engage mid-level managers who are close to daily execution. These are the people who are in a position to influence many others in the organization.
- Make a concerted effort to help employees connect the organization’s purpose to their individual actions and decisions. Establish and strengthen the critical bridge between a purpose statement and transforming your organization into one that holistically lives its purpose.
- Identify and enlist change makers and influencers on the team who can be role models and play leadership roles so others have the confidence and guidance to be strong followers who embrace the change.
Two Examples of Purpose-Led Businesses
Patagonia is a company whose commitment to being purpose-led, and to sustainability, put it well ahead of its time. The brand’s purpose: “To build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”
On Black Friday 2011, Patagonia placed a now-famous ad in the New York Times with the tagline “Don’t Buy This Jacket” written above the image of a top-selling R2 jacket. Text below the image encouraged customers to reflect on the environmental cost of a culture of consumption; to reduce consumption as they continue to wear older, long-lasting Patagonia garments; and to repair, share or recycle gear using Patagonia resources designed for these purposes.
The ad is one example of how Patagonia aligns execution to the brand’s purpose and what being authentic to the purpose means. Business priorities supported by the purpose: reinforcing the brand values, the durability of their products, justifying product pricing and differentiating in a busy category.
Closer to the insurance sector, consider CVS’s commitment to its purpose, beginning with the name change from CVS Caremark to CVS Health in 2014. The change aligns with the company’s purpose: “Helping people on their path to better health. Whether in our pharmacies or through our health services and plans, we are pioneering a bold new approach to total health. Making quality care more affordable, accessible, simple and seamless…”
One decision made to align to the brand’s purpose was to halt selling any tobacco products as part of a strategic overhaul and deliberate realignment, including establishing new health partnerships and in-store services and merging with Aetna. CVS gave up an estimated $2 billion in tobacco sales and has seen overall growth in their business. A further stakeholder impact has been that its move out of tobacco created public health benefits as studies have linked overall declines in tobacco purchasing with CVS’s decision—and the decline also includes other tobacco sellers. (Source: “After CVS Stopped Cigarette Sales, Smokers Stopped Buying Elsewhere, Too,” Forbes, Feb. 20, 2017)
An authentic purpose responding to the question “Why do you exist?” can be truly transformative in ways well beyond the core mechanics of the P&L, products and services.
How Can an Organization Test the Strength of Its Purpose?
Early in my career I was taught by a mentor that “execution is strategy”—a powerful lesson that I often cite. To test the strength of an organization’s purpose, look to indicators related to execution. For example:
- Is the purpose evident in the organization’s daily behaviors, or is it stuck inside presentation decks?
- Is the purpose equally relevant to internal and external stakeholders?
- Does the purpose inspire employees, vendors and partners and guide their daily actions with respect to the brand?
These criteria set a high bar and emphasize that defining purpose is not a communications exercise. It is not about a slogan. It is deeply linked to how the business intends to create value and use its resources to benefit stakeholders. It is one that requires deep thought, alignment to strategy and execution, and full employee engagement to create impact. Given the value that can be realized in the face of today’s market undertaking, defining and implementing a brand’s purpose is a worthy endeavor for the insurance sector, particularly in 2021.