Filed Under:Life Insurance, Life Practice Management

Allianz Life: A tale of transformation

The principles and practices of organizational transformation directly apply to individuals in the life insurance industry.
The principles and practices of organizational transformation directly apply to individuals in the life insurance industry.

The principles and practices of organizational transformation have direct application for individuals in the insurance and financial services industry.

In 2005 the new CEO of Allianz Life, Mark Zesbaugh faced the sort of challenge every CEO loves.  The company was growing at 20 percent year over year.  To most traditionalists this would be good news and clearly not any sort of call to action.  Mark was no traditionalist and knew that while from a financial perspective this was indeed good news, from a larger organizational perspective it posed a challenge as the existing systems, processes, and practices for leading and managing the company were not sufficient to enable this growth rate much longer. Thus was born Pursuing our Potential, a large-scale transformational project for the entire company.

The speed of change

Transformation means a large amount of change in a small amount of time.  To those watching from afar it can often look like magic as things do change quickly.  Those on the inside know that this scale of change is only possible with a big commitment to learn, a strong structure in which it can take place, and consistent, coherent work.  The challenge was simple: How do we transform Allianz Life from an organization that was getting increasingly bogged down in complex processes into a performance-based enterprise.

Over the years we have watched way too many change or transformational efforts fail. And it was imperative that we not fall into any of the historical traps.  Transformation isn’t about getting people motivated or putting up posters, slogans, and new organizational charts. To successfully transform an organization requires consistent work in three areas. 

First and most important is the mood of the organization.  Most individuals and organizations are in the grip of unproductive moods like distrust, cynicism, resentment, resignation, arrogance or complacency.  No amount of ‘happy clappy’ motivational work is going to make a difference here and thus it is crucial to know how to move people into the generative moods of ambition, confidence, and trust.  This is vital: Mood is everything because if you don’t get this right nothing else will matter. We have a proven method for shifting the mood in an organization, but that in and of itself is insufficient.

The second key area is management practices.  Most of what we call ‘modern management’ practices were developed by people who were born in the 1800s.  They were deployed in the early 1900s for Henry Ford and his peers who were ushering in the industrial era. 

Today the value generators in the economy and certainly everyone in the insurance and financial services industries are what we have termed ‘Coordination Workers.’  These are people who are educated, agile, mobile, creative, innovative, and adept problem-solvers.

They generate value not by making things, but by their effective coordination with each other to produce customer satisfaction.  In the industrial era management meant supervision and people went to work out of survival.  Coordination workers bristle at supervision, as they are educated and find it demeaning. Today, work is no longer about making things; it is about cooperation and collaboration. Thus, management has to be oriented towards enabling those practices, not supervising activities. 

We have built a new body or work called Commitment-Based Management, which is designed especially for today’s workplace.  The simple reality is that literally every manager in the country has been schooled in the practices of the industrial era.  It is what is still taught in business school and it is what the person who had the job before you knew and passed on.  While common, the practices of the industrial era are increasingly ineffective in today’s world. 

We deployed various levels of these new practices to the entire 2,300-person organization via a series of conferences, assignments, on-site coaching and implementation projects.  This is the only way to build new competence.  No amount of reading or understanding will do it.

Authentic learning takes practice, patience, perseverance and a solid structure for fulfillment.  While quite powerful, even this robust deployment of new practices will not complete the transformation.

The third key area is systems and processes.   In this case the systems and process of the organization must be coherent with the declared mood and the new management practices.

For example, we have executives come to us all the time and ask if we can get their company, division, or department to work together as a team.  We always tell them the same thing.  “We can certainly promise you a short-term improvement in teamwork but for a permanent shift I first need you to tell me about your compensation system?  Oh, it only rewards individual effort.  Then you can forget about having teamwork as your compensation system is not coherent with the mood of trust and the practices of cooperation and collaboration that are required for genuine teamwork.” 

All of the work on shifting the mood and installing new management practices will go nowhere if there is not parallel change in the systems and process of the business so that the new practices are rewarded and sustained.

Over the course of 18 months we reached some 2,200 people with the work and the Allianz team completed over 50 implementation projects.  They invested some $10million in the project and calculated a return of over $600 million. 

Visualizing the process

In the chart below, you can see in graphic form the three essential variables in the transformational process and how they interconnect. The blue box represents the steady state that occurs in any organization.  The larger green is the result of a genuine transformational process.  All of this is the same for individuals.

If as a sales person I want to improve my performance, not just incrementally but in a transformational way, I first have to generate a new mood of ambition and confidence.  Nothing is going to change if I am stuck in cynicism and resignation.

From there I need to develop new practices for myself.  No amount of visualization, affirmations, or motivational work is going to suffice.  Instead I need to put in place new practices that are designed to produce the desired transformation.  Finally I have to build my own systems and processes for ensuring that I sustain the new practices.  With all three of the key elements of transformation in place new worlds will open up.

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