Manulife CEO and president says the need for industry change is compelling but the path to success is challenging
The need for change in the insurance industry is compelling but the path to success is tough, according to one of the industry’s leading CEOs.
Roy Gori, president of Manulife, was speaking at the Toronto Global Forum, The International Economic Forum of the Americas, and compared the sector to the likes of Airbnb, Netflix and Apple when it comes to having “promoters”. According to studies, these firms have about 89% more promoters than detractors, while the insurance score globally stood at a dismal -6%, meaning more detractors than promoters.
Gori viewed this situation as a “tremendous opportunity” for companies to get on the front foot by driving a customer-centric agenda and “demonstrating how they can do things radically different to the way the industry is currently operating”.
However, he warned that true change within a company, including the one the size of Manulife, is really difficult and that the problems can be drilled down to three root causes.
He said the first is that organizations like his have old legacy systems. “These systems are typically 50-plus years old and are not designed to work in an agile, customer friendly and easy way.
“The first port of call is acknowledging these legacy systems are in place, and that you need to embark on a journey of overhauling those systems.
“In some cases, it is replacing them and in other cases it's about minimizing the impact of these legacy systems by putting micro service layers above them and then creating agile apps that can interface with the customer. You are, therefore, not relying on the legacy systems to enable the delivery of services to the consumer.”
The second barrier to change is that companies fall into believing the fallacy that they are unique and beyond being disrupted, simply because they are too important or complex. History is littered with examples of this, including recent ones like Blockbuster and Kodak.
“Kodak believed until the very end that consumers would not want digital photos,” Gori said, “and that they would always want a hard copy photo. Blockbuster again, when dealing with the revolution of Netflix, were in denial. They said the whole experience of picking a movie in a store was a big part of the satisfaction when consuming a movie. We know how that story ends.”
The final barrier to change the CEO outlined is that of culture, an element of a business he believes is most complicated to affect. Within that, he identified four sub-barriers firms have to overcome.
From easiest to hardest, they are: whether people in your organization actually believe change is necessary; an acceptance that it’s them that has to change rather than another colleague or department; conveying the urgency of the changes; and convincing people that they need to change today.
The last point, added Gori, makes people feel uncomfortable and will likely involve resistance.
“It’s like playing tennis right-handed your whole life and then someone asks you to play left-handed. For the first game, it’s not very comfortable, it’s awkward, not pretty and you're going to play a terrible game.
“The natural bias is to put the racket back in your right hand because that's what you are used to. Providing support and acknowledging that there's going to be difficulty is vital.
“Most people focus a lot of the time and effort on what's most obvious – having a strategy in place with the programs, the projects, the initiatives, and they're all important. But that is just the tip of the iceberg. What is absolutely critical when you try to transform an organization is that you spend more time on cultural change.”
