Cultural and agile transformation in life insurance (article by Patrick Dahmen in Leipziger Versicherungsseminare, Vol. 19)
The life insurance industry faces many challenges such as the significant increase in volatility in the capital markets, rapidly rising interest rates, regulatory requirements, and cost pressures. Driven by innovation, service promises and simplicity from other industries, the comprehensive evolution of the business model - also known as transformation - is therefore weighing heavily on life insurers. In his recently published article, our Managing Partner Patrick Dahmen shares his key learnings from his board and consulting experience paired with insights from academia.
The success factors of transformation
The chances of success stand or fall with the commitment of top management. A recent survey of nearly 3,000 company representatives shows that without the support of the C-level, the chances of a successful transformation are rather low at around 20%. Conversely, if transformation is made a top priority, the chances of success increase to around 50%. This shows that the organization looks closely at what the top executives are doing and then acts accordingly.
Transformations that are communicated purely in terms of figures, usually do not have the desired effect because they ignore the emotional level and thus, have little motivating effect. They must be embedded in an emotionally anchored overall story, since only in this way can they lead to the enthusiasm that is necessary for success.
Another important factor is the (collective) emotions. For years, it was not considered professional to talk about emotions in business. Nevertheless, changes lead to fear of loss. If this is not taken seriously and overplayed, affected employees and managers remain in resistance. It is, therefore, important to turn those affected by the change into actors through appropriate care, appreciation, and involvement.
Selected recommendations for successful transformation
Based on the method of management consultant and best-selling author Simon Sinek, the question of meaning or the reason for the existence of one's own company stands at the beginning - ("Why do we exist?"). The answer serves the company as a guiding star for all decisions. Accordingly, the next step is to derive a strategy, the "what", which defines the concrete actions to get closer to the "why".
At the same time, the "how" must be addressed, for example how the goals are to be achieved. This includes the general interaction especially the corporate culture, as well as the basic leadership style.
As already stated at the beginning, the active involvement of top management is of central importance. Top management must lead the way as a driver of transformation, which in concrete terms means living these changes themselves, demanding them of others and communicating them clearly.
The task of top management is to accompany the transformation not only in terms of content, but especially in social terms. This means cultivating an environment of psychological security and, addressing fears and needs with confidence.
In this context, the effect of communication should not be underestimated. If this is lacking, irritations and speculations can quickly arise. By contrast, very regular, open, and appropriate communication on topics such as progress, but also challenges, can send positive signals.
Curious? You can find further scientifically based findings and more in-depth recommendations for action in the chapter "Kulturelle und agile Transformation in der Lebensversicherung als Antwort auf die Digitalisierung und ein verändertes Kundenverhalten" in the recently published book LVS: Standpunkte – Beiträge renommierter Persönlichkeiten der Versicherungswirtschaft in Leipziger Seminaren (Buch) – Publisher Prof. Fred Wagner, Fachmedien Otto Schmidt