Pivot to Success

My Insurex partner, Mike Corey, has written cleverly about the value of setting goals.  I have a view, based on experience, of achieving or not achieving them.

My past experience was clear and enlightening in leading insurance entities.

Our corporation was a mature one, with four operating businesses.  The corporate profitability goal, for itself and for each of the business units, was the same—earn a 15% return on allocated equity (interest rates were higher at the time) and grow 6% per year: sounds reasonable, right?  If we achieved those goals, we could pay a dividend of 9% of book equity and use the other 6% of the return to fund the desired growth, ultimately leading to 6% annual increases in that dividend.  Who wouldn’t want to be invested in such a company?

Of course, the company also had other objectives, reflected in seven core values and an abiding commitment to customers, employees and the communities in which it operated.  Only the profit goals were really objective, though.  They were appropriate and there was only one problem with them—the corporation as a whole never once achieved them.  Nor did three of our four business units- not even in a single year.

We had regular quarterly meetings of all officer-level staff.  During those meetings, the company’s results were reviewed and current topics of interest were discussed.  So how could the company, which tracked and reviewed its results quarterly, never achieve its goals?  Yes, those goals were a challenge for competitive, mature businesses.  But they were consistently stated and in place for many years, as the CEO’s tenure ran 21 years.

I attribute these multiple, systemic failures to a conflict caused by mixed signals.  Though the CEO would review the results for all the officers, it was on other issues that the officer group saw his passion displayed, namely social and community ones-and their professional compass mirrored his.  As a result, many of the officers of the company were supporting various efforts in the community and being praised for doing so.  And, to make things even more irritating, the one business unit that hit the goals was never cited and praised in an officers’ meeting. 

So, as you build your enterprise, here are some reminders:

Have clear business goals with minimum deviation and stick to them. Hold people accountable. If there is a failure, fix it quickly and with a sense of opportunity, not being punitive—but again, fix it.  Don’t allow a CEO or mega influencers to divert you from those commonly held goals.  There may be only one captain of a ship, but every officer and every crew member must be aligned.  If the operational leaders on that ship are not aligned, the consequences can lead to missing the target, a loss of confidence in leadership and the brand, and massive opportunities for competitors to undermine you and hence, Murphy’s Law.