Does Continuity Have a Price?
In an article we published in the Fall 2020 edition of the The Demotech Difference — “The Importance of Sound Implementations” — we wrote this:
Turnover is the equivalent of corporate amnesia.
We recalled that recently because there seems to be a spate of updates of late telling us about leadership turnover in the vendor community of which we’re a proud member. And it seems as if many of the folks coming into those leadership positions are from outside the insurance industry. Please don’t misunderstand us: We completely understand the desire for new blood, fresh ideas, varied perspectives, and deliberately defying complacency. But we don’t understand how companies can sacrifice that much intellectual capital and still remain viable and competitive.
Let’s Sharpen the Point
Turnover of any kind diminishes continuity. Replacing people with folks from outside the industry would also diminish domain experience, industry knowledge, process familiarity, troubleshooting and problem-solving experience, organizational cohesiveness, and reliable interdependencies — to name just a few. And would that leave organizations that diminish themselves with constant turnover and repeated hiring from outside the industry in a perpetual state of x-steps-ahead-x-steps back?
It may boil down to an overall lack of insurance operational expertise. If I’ve led and auto-racing team and I’m appointed to lead an insurance software company, I likely won’t understand the deliberate way the industry moves forward and embraces change. The fact is not many executives from outside the industry understand that until it’s too late, until after they’ve made commitments to the their customers. That creates panic, wasted time, financial losses, and diminishing returns when they realize they were overly optimistic. With no knowledge of the history of the company, its successes and failure, and the decisions that led to both, leaders with no industry experience are being set up to fail. So are their customers.
Realistically speaking, how do you sell that? How can you make an argument for organizational stability and credibility if you’re announcing the fact that the organization lacks stability and credibility? We recognize those are tough questions. But we aren’t aware that anyone else is asking them.
Let’s Do the Math
Even if those kinds of losses of experience, continuity, and intellectual capital don’t have direct costs (we think they must), they have opportunity costs, at the very least. What’s the cost of strategic directives that aren’t realistic — or simply may not work — because they suffer from a lack of understanding of the problems carriers face.
We’re absolutely sure this must make some kind of sense to someone. But it doesn’t make sense to us. On the other hand, what do we know?
Is there anything like a continuity cost? We’d have to say we’re not sure.
But we’re positive a lack of continuity has a very large price tag.
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