Be Careful What We Wish For

We’re tech people. We’ve always thought we’re tech people so insurance people wouldn’t have to be tech people. And we’ve always felt like we were alone in that thinking. But the tide may be starting to turn.

The February edition of Best’s Review ran an article entitled, “Generation Next”, contending that the traditional focus of the insurance industry on technical competence (though not limited to technological competence) may be too narrow to carry it into the future. As Limore Zilberman, a consultant at the executive search firm, Russell Reynolds Associates, put it:

People were hired because of their technical prowess and because of their technical acumen and their technical contribution … [but]  the landscape of leadership is going to change. The expectations of leadership are going to change. Our technical talent is not necessarily well-poised to take on broader leadership capabilities.

That seems about right. To put it another way: With all the bigger fish insurers have to fry, technical talent may be a red herring.

Leaders Lead

In arguing that the insurance industry focus on specialists needs to broaden sufficiently to include generalists in leadership positions, Zilberman elaborates on the characteristics of the people she believes are better suited to fill the leadership roles of the future:

They’re agile, they’re adaptable, they’re quick learners, they’re good problem solvers, they’re forward-looking … Those types of people can be put at the helm to manage the lower ranks of the organization that might carry more of that technical expertise.

At risk of seeming to quibble with terminology, we take issue with Ms. Zilberman’s notion of managing the lower ranks. (We even find lower to be a tad condescending; although, we do take her point.) We take issue because leaders lead. Managers manage. And those two jobs, along with their respective responsibilities, are quite different.

But that difference in perspective on vocabulary notwithstanding, Ms. Zilberman and the article are correct. The insurance industry does need to think more broadly. And it does need to embrace well-rounded, critical-thinking generalists as its leaders.

If continue to favor leaders whose strength are technical (linear) thinking, as opposed to general (conceptual) thinking, we should be careful what we wish for.

Tight Lips Sink Ships

If you’re familiar with the expression, “Loose lips sink ships,” you understand why too much information (TMI) can be a bad thing. By the same token, too little information (TLI) can be equally bad. Case in point: The insurance industry seems conspicuously tight-lipped when it comes to information about implementations. As a result, there’s precious little data on failed or failing implementations, to say nothing of blown budgets, blown dates, and undue expectations as they apply specifically to the insurance industry.

Fortunately, there are two other things from which to derive meaningful and applicable perspectives: (1) A plethora of data on ERP implementations. (2) Extrapolation. Let’s have a look.

The Numbers Are In

Here are just three citations from the volumes of information about EPR implementations available on the Web: First, here just five of the failures listed by ERP Focus in “Ten ERP failure statistics that highlight the importance of getting it right first time round“:

  1. 60% of ERP projects fail.
  2. 57% of ERP systems take longer than expected.
  3. 54% of ERP systems exceed projected budget targets.
  4. 40% of ERP systems experience at-large operational disruption.
  5. 41% of enterprises fail to achieve more than half of the expected benefits.

Second, according to this infographic from Technology Evaluation Centers:

  • Nearly 50% of ERP implementations fail the first time around.
  • On average, 30% of ERP implementations take longer than estimated.
  • Most implementations cost three to four times what was budgeted.
  • About 65% of the time, budgets go over because the system needs modifications to improve usability. But companies realize this only after the implementation has started.

Finally (for now), Management Consulting Now reports ERP implementations:

  • Take longer than expected (61%)
  • Cost more than expected (74%)
  • Fail to deliver more than 50% of the expected benefits (52%)
  • Leave their respective organizations unhappy with the results (59%).

While all of those sources and studies might not agree, we can agree all of their statistics are dismal … and unnecessary.

Why Settle?

These numbers may be dire, but they need not be leading indicators, as we say in the biz. With some initiative, some diligence, some foresight, and a clearly articulated set of shared expectations, these statistics can be greatly improved. Oh, and let’s not forget clear and open communication between the parties involved.

Remember: Tight lips sink ships.